Seed Stage Option Pool: Size Benchmarks & Dilution Examples (2026)
last updated: Feb 11, 2026
Investors will ask for a 20% option pool by default because it dilutes you, not them. This guide provides the actual market data you need to negotiate that number down to a reasonable standard and protect your ownership.
TL;DR
A seed stage option pool is a block of equity (usually 10-20%) set aside for future employees, advisors, and consultants. It is almost always carved out of the founders' equity before the new cash hits the bank.
How to read this: Use the data below to push back on a 20% pool request.
- Benchmark: 10-15% is standard; 20% is aggressive and often unnecessary.
- Rule: Calculate the pool size based on a hiring plan for the next 18 months, not a random VC number.
- Warning: The "Option Pool Shuffle" means you pay for the pool from your pre-money valuation, effectively increasing the price of the round for investors.
How to read this: Use the data below to push back on a 20% pool request.
Glossary
- Pre-money pool: The option pool created before new investment, diluting only existing shareholders (founders).
- Post-money pool: The size of the pool relative to the total company ownership after the investment is finalized.
- Fully diluted basis: The total share count assuming all options, warrants, and convertible securities are exercised.
Sizing scenarios
Use this table to benchmark your term sheet against market realities. Most VCs will push for the "High" bracket regardless of your actual hiring needs. For specific industry data, check our SaaS Option Pool Benchmarks.
How to size your option pool
Don't guess. Math is your only defense against dilution. According to Founder FAQs, average seed pools historically hover near 10-15%. A 20% pool is a high-water mark you should fight unless you have a massive hiring plan immediately post-close.
1. Create a hiring plan
Before accepting a number, map out exactly who you need to hire in the next 18 months. Assign a rough equity percentage to each role (e.g., 1.0% for a founding engineer, 0.5% for a senior dev). Sum these up. If the total is 9%, adding a buffer gets you to ~11-12%, not 20%.
2. Calculate the dilution cost
Here is how the dilution actually hits your cap table during the "shuffle" if you raise $2M at an $8M pre-money valuation ($10M post-money):
1. Create a hiring plan
Before accepting a number, map out exactly who you need to hire in the next 18 months. Assign a rough equity percentage to each role (e.g., 1.0% for a founding engineer, 0.5% for a senior dev). Sum these up. If the total is 9%, adding a buffer gets you to ~11-12%, not 20%.
2. Calculate the dilution cost
Here is how the dilution actually hits your cap table during the "shuffle" if you raise $2M at an $8M pre-money valuation ($10M post-money):
- Target: 15% Post-Money Option Pool ($1.5M value).
- The Trap: Investors require this pool to be included in the $8M pre-money valuation.
- The Result: Your effective pre-money valuation for your shares drops to $6.5M ($8M pre-money minus $1.5M pool).
- The Reality: You own less of the company than the "headline" valuation suggests.
Pre-money vs post-money pool
The difference between these two terms is often the difference between owning 60% or 50% of your own company. This mechanism is often called The Option Pool Shuffle.
- Pre-money pool (The Standard): The investor says, "I want to own 20% of the company after the pool is created." You, the founder, pay for the entire pool creation out of your stake. The investor is not diluted by the pool.
- Post-money pool (The Founder Friendly): The pool is created after the cash comes in. Both you and the investor are diluted equally by the new options. This is rare in seed deals but worth asking for if you have strong leverage.
Risks
Failing to plan your pool correctly leads to three primary risks that can wreck your Cap Table Template:
- Over-dilution: If you agree to a 20% pool but only use 5% in the next 18 months, you gave up 15% of your company for nothing. That equity sits empty until the next round, where it might be re-shuffled.
- Under-sizing: If you only set aside 5% but need to hire a VP of Sales (1-2%) and a CTO (2-5%), you will run out of shares. You will then have to expand the pool, which requires board approval and dilutes everyone—something investors hate doing shortly after a round.
- The "Evergreen" trap: Some term sheets include "evergreen" clauses that automatically top up the pool every year. Avoid this. It guarantees perpetual dilution regardless of performance.
Will optimizing your option pool actually get you to $10k MRR?
Mastering the nuances of a seed stage option pool is a necessary defensive move, but it is not the whole picture. You can negotiate the pool down to 10% and save 5% of your equity, but if your product does not solve a burning pain, you own 5% more of a zero-value asset.
You can have perfect execution here, but if your other variables (offer, strength, market timing) are weak, your probability of hitting $10k MRR remains near 0%. This data is strictly an input for the calculator so you can model the damage and get back to selling.
You can have perfect execution here, but if your other variables (offer, strength, market timing) are weak, your probability of hitting $10k MRR remains near 0%. This data is strictly an input for the calculator so you can model the damage and get back to selling.
FAQ
- You:Is a 20% option pool standard for seed stage?Guide:No. While investors often ask for 20%, market data suggests 10-15% is more common for seed deals. 20% is typically reserved for Series A or situations where the founding team has significant gaps.
- You:Who pays for the option pool?Guide:Almost always the founders. In a typical "pre-money pool" setup, the shares are allocated from the founder's ownership stake before the investor puts in their money.
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📉 Avg founder's probability: 12%
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