Calculate option pools for NYC startups. Learn East Coast equity benchmarks (16-20%), employee grant standards, and how New York option pools differ from Silicon Valley. Free calculator.
New York City has evolved into America's second-largest startup ecosystem, with distinct compensation philosophies that directly impact option pool sizing and employee equity grants. While Silicon Valley companies compete almost exclusively on equity upside, NYC startups balance equity with higher base salaries, reflecting the city's deep talent pools in finance, media, fashion, and professional services.
NYC option pools typically range from 16-20% at Series A, slightly higher than West Coast standards. This reflects several East Coast realities: higher cost of living, intense competition from Wall Street and consulting firms offering premium cash compensation, and employee preferences for lower-risk compensation packages with meaningful but not excessive equity stakes.
The NYC founder's dilemma: East Coast investors often push for larger option pools to "match Silicon Valley standards," but NYC hiring realities frequently require fewer total options because candidates accept smaller equity grants paired with stronger cash packages. Understanding this dynamic is crucial for negotiating appropriately sized pools that don't over-dilute founders.
New York's diverse startup ecosystem means option pool sizes vary significantly by industry vertical. Here's what to expect across NYC's major sectors:
NYC fintech companies face brutal competition from investment banks, hedge funds, and established financial technology firms. Fintech option pools skew larger because you're convincing Goldman Sachs analysts or JPMorgan engineers to trade stable, high-paying roles for startup equity.
Typical fintech grants in NYC:
Fintech grants are typically 20-30% smaller than Silicon Valley equivalents because base salaries are 15-25% higher. A senior engineer might accept 0.30% equity with a $180K base in NYC versus 0.50% equity with a $160K base in San Francisco.
NYC's media and advertising technology startups benefit from deep local talent in publishing, broadcasting, and marketing. These sectors have lower cash compensation expectations than finance, allowing for smaller equity grants and more modest option pools.
Typical media/adtech grants:
E-commerce startups in NYC compete with Amazon, Etsy, and traditional retail converting to digital. Option pools land in the middle of NYC's range, with grants reflecting the balance between technical talent (higher equity) and operations/fulfillment roles (lower equity).
Typical e-commerce grants:
NYC's robust healthcare and life sciences ecosystem competes with hospital systems, pharmaceutical companies, and research institutions. These sectors offer stable employment and strong benefits, meaning startups can attract talent with moderate equity grants.
Typical healthtech grants:
East Coast venture capital firms predominantly use pre-money option pool structures, meaning founders absorb the full dilution of employee equity grants. However, NYC's competitive fundraising environment—with multiple active micro-VCs, crossover growth funds, and increasing West Coast investor activity—has created more flexibility for founder-friendly terms.
In a typical NYC Series A with a 18% pre-money option pool:
Example: $12M pre-money valuation, $4M raise, 18% option pool
Cap table after Series A:
The founders bear the full cost of the 18% option pool through their dilution before the new money arrives.
Post-money option pool structures remain less common but are increasingly negotiable, particularly with founder-friendly funds like Union Square Ventures, FirstMark Capital, and Lerer Hippeau. In these structures, both founders and investors dilute proportionally to create the option pool.
Same example with post-money treatment:
Cap table after Series A with post-money pool:
Founder benefit: Post-money treatment preserves an additional 2-3 percentage points of founder ownership on an $18M post-money deal—potentially worth $500K-$900K if the company exits at a meaningful valuation.
Follow this systematic process to calculate precisely how option pool creation will impact your cap table:
Gather complete cap table data:
Fully Diluted Shares = Common + Preferred + Option Pool + Converted SAFEs/Notes + Warrants
Build a detailed hiring plan for the 18-24 months following your raise. For each role, specify:
Sum total equity required across all planned hires, then add a 15-20% buffer for unexpected needs. This becomes your target pool percentage.
If investors want an 18% pool but you currently have 8%, you need to add 10% in new option shares. Use this formula:
New Option Shares = [(Target Pool % × Current FD Shares) ÷ (1 - Target Pool %)] - Current Pool Shares
Example: If you have 10,000,000 fully diluted shares and an existing 8% pool (800,000 shares), but investors want 18%:
Before the investment but after creating the expanded pool:
New Founder % = Current Founder Shares ÷ (Current FD Shares + New Option Shares)
If founders currently own 7,500,000 of 10,000,000 FD shares (75%):
The option pool expansion diluted founders from 75% to 65.8%—a 9.2 percentage point reduction before any investor money arrives.
After your Series A closes:
Final Founder % = New Founder % × [Pre-Money Val ÷ (Pre-Money Val + Investment)]
If raising $4M on a $12M pre-money:
Founders went from 75% to 49.4%—losing 25.6 percentage points. Of that dilution, 9.2 points came from the option pool and 16.4 points from investor equity.
Use these NYC-specific benchmarks when building your hiring plan and justifying your target option pool size to investors:
NYC-specific note: These ranges are approximately 20-30% lower than Silicon Valley equivalents because NYC base salaries are 10-20% higher and employees have stronger preferences for cash-heavy compensation.
Avoid these frequent errors that cost East Coast founders unnecessary dilution:
West Coast investors often apply their standard 20% Series A pool requirement to NYC deals, but NYC hiring plans typically need 15-18% because individual grants are smaller. Blindly accepting 20% costs founders 2-5 percentage points of unnecessary dilution.
Solution: Build a bottom-up NYC-specific hiring plan using local equity benchmarks. Show investors that an 18% pool fully funds your needs, making the extra 2% pure dilution with no benefit to the company.
NYC startups typically pay $10K-$30K more in base salary than West Coast peers for equivalent roles. This cash premium reduces required equity grants, but many founders still use Silicon Valley option benchmarks, creating oversized pools.
Solution: When modeling option grants, explicitly factor in your higher cash compensation. An engineer receiving a $175K base needs less equity than one receiving a $150K base.
NYC's concentration of senior executive talent from finance, consulting, and Fortune 500 companies creates higher expectations for C-level equity grants. A CFO from Goldman Sachs expects more equity than one from a regional accounting firm.
Solution: Reserve 25-30% of your option pool for senior executive hires. Don't allocate the entire pool to engineers and product managers, leaving no room for a VP of Sales or CFO without diluting shareholders.
Your 18% Series A pool will last approximately 18-24 months. At Series B, you'll need a 10-15% refresh pool. Many founders don't model this multi-round dilution, leading to surprises when their ownership drops below psychological thresholds.
Solution: Model your cap table through Series C before accepting your Series A terms. Understand your ownership trajectory across multiple rounds and ensure you'll maintain sufficient ownership to stay motivated.
Using percentage rules like "engineers get 0.20%" instead of seniority-based grants wastes option pool shares. A junior engineer doesn't need the same equity as a senior principal engineer.
Solution: Create a detailed hiring matrix with specific roles, seniority levels, and grant ranges. Model every individual hire rather than using blanket percentages.
East Coast investors have become increasingly sophisticated about option pools. Here's how to negotiate effectively:
Don't debate pool size abstractly. Present a detailed 18-month hiring plan showing:
Investors can't argue with data-driven hiring plans backed by market benchmarks.
Collect option pool data from recent NYC Series A rounds in your sector. If NYC fintech companies are raising with 18% pools, push back on 22% requests by showing comparable transaction data.
Sources for comp data:
If investors push for a 20% pool but your near-term hiring plan only needs 16%, propose a compromise: Create a 16% pool now, with an agreement to expand to 20% when you hit specific milestones (e.g., $5M ARR, 50 employees).
This protects founders from dilution if hiring takes longer than planned while satisfying investors that adequate pool capacity will exist when needed.
For founder-friendly NYC investors, propose post-money option pool treatment. This is increasingly common with firms like Union Square Ventures, Lerer Hippeau, and RRE Ventures who explicitly market themselves as founder-aligned.
Frame it as fairness: "We're building this option pool together to hire the team that grows our collective investment. It's equitable for all shareholders to dilute proportionally rather than founders bearing the full cost."
Show investors that a 16% vs 20% pool makes negligible difference to their returns. Run scenarios showing that the company's success depends on execution, not whether the option pool is 16% or 20%.
If the company exits at $200M, the investor's return differs by only ~$1M between pool scenarios—immaterial compared to the binary outcome of success or failure. Meanwhile, founders' ownership differs by 3-4 percentage points, worth $6M-$8M.
While four-year vesting with a one-year cliff is standard across US startups, NYC has developed specific practices around acceleration and vesting schedules:
NYC startups increasingly include double-trigger acceleration provisions, particularly for senior hires from stable corporate positions. Double-trigger means options accelerate (vest immediately) only if two conditions occur: (1) the company is acquired, and (2) the employee is terminated within 12-18 months post-acquisition.
This protects employees from "acqui-fire" scenarios where acquirers buy the company then immediately terminate key employees, causing them to lose unvested equity.
When recruiting CFOs, GCs, or other senior executives from Wall Street or consulting firms, NYC startups sometimes offer accelerated three-year vesting or even front-loaded schedules (30% year one, 30% year two, 40% year three).
This accommodates executives accustomed to investment banking's front-loaded bonus structures rather than startup equity's back-weighted vesting.
NYC startups refresh grants earlier than West Coast companies—often at the three-year mark rather than waiting until initial grants fully vest. This reflects competition from finance and consulting, where annual bonuses create ongoing retention incentives.
The ICanPitch platform includes specialized calculators for NYC startups that account for East Coast compensation dynamics:
Select "New York" as your location to automatically load NYC equity benchmarks and compensation standards. The calculator adjusts grant ranges based on local market data.
Toggle between pre-money and post-money option pool treatment to instantly see the ownership difference. Export both scenarios to present during term sheet negotiations.
Use the integrated hiring plan builder to model specific roles, seniority levels, and grant amounts. The tool validates your grants against NYC benchmarks and flags outliers.
Select your industry (fintech, media, e-commerce, healthcare) to see how your pool size compares to recent NYC rounds in your sector. Use this data to justify your target pool to investors.
Project your cap table through Series B and C to understand long-term ownership trajectories. See exactly how refresh pools at each round impact founder equity.
Not necessarily. While some NYC investors request 18-20% pools (slightly above SF's 15-18%), actual hiring plans often require less equity because NYC base salaries are higher and individual grants are smaller. Build a bottom-up hiring plan rather than accepting market standards without analysis.
Convert all SAFEs and notes at your anticipated Series A price per share, add them to your fully diluted share count, then calculate option pool size as a percentage of that total. Many founders forget this step and under-reserve option pool capacity.
You'll need to issue options from outside the pool, which dilutes all shareholders proportionally. This creates tension with investors and complicates your cap table. Always maintain a 15-20% buffer in your pool for unexpected hires or larger-than-planned grants.
No. Creating an oversized pool at Series A dilutes you now to avoid dilution later—but you bear the full cost today. It's better to create right-sized pools at each round rather than over-reserving early.
Standard advisor grants range from 0.10-0.25% depending on involvement level and stage. Most founders allocate 5-10% of their option pool to advisors, with the remaining 90-95% reserved for employees.
Option pool size is a binding term sheet provision. Once you sign, you've agreed to that pool size through the definitive financing documents. Negotiate pool size before signing the term sheet—it's nearly impossible to change afterward.
Option pool creation is one of the most significant founder dilution events in your fundraising journey. NYC founders have unique leverage in these negotiations due to higher cash compensation norms and diverse talent pools that allow for smaller individual equity grants.
The difference between a 16% and 20% option pool represents 3-4 percentage points of founder ownership—potentially worth millions at exit. Don't accept investor defaults without modeling your specific hiring needs.
Ready to calculate your optimal option pool size? Use the ICanPitch NYC Option Pool Calculator to model dilution scenarios, compare pre vs post-money treatment, and build data-driven hiring plans that justify your pool size during term sheet negotiations. Take control of your cap table and preserve maximum founder ownership through your fundraising rounds.
Try our free startup calculators to make informed decisions about your equity and fundraising.
Explore Calculators →