Standard option pools: 10% pre-seed, 15% seed, 15-20% Series A. Learn how to size your option pool, who it dilutes, refresh mechanics, and benchmarks by funding stage.
TL;DR: Standard option pool sizes are 10% for pre-seed, 15% for seed stage, and 15-20% for Series A. Option pools dilute existing shareholders (primarily founders) and are typically created from pre-money valuation. Understanding proper sizing prevents both running out of equity for key hires and over-diluting founders unnecessarily.
An option pool (also called an equity incentive plan or stock option plan) is a reserved allocation of company equity set aside specifically to compensate employees, advisors, and consultants. These aren't shares that have been issued yet—they're reserved shares that will be granted as stock options over time as you hire and grow your team.
Think of an option pool as a dedicated budget for talent acquisition, except instead of paying cash, you're compensating with equity ownership in your company. For early-stage startups competing against established companies with bigger salaries, the option pool is often your primary competitive advantage in recruiting.
According to data from Carta analyzing over 20,000 startups:
If you're raising venture capital, investors will require an option pool as part of the deal. The question isn't whether to create one—it's how big it should be, when to create it, and who bears the dilution.
The right option pool size depends on your stage, industry, hiring plans, and geography. Here are the benchmarks based on data from thousands of startups.
At the pre-seed stage (typically friends and family rounds, angel investments, or pre-institutional funding), you're likely still figuring out product-market fit with a small founding team.
Typical characteristics:
Recommended option pool: 5-10%
Why this size:
Who you'll hire with a 10% pre-seed pool:
Statistics: Among startups that successfully raise seed funding, 67% created their initial option pool at pre-seed with a median size of 8%.
At seed stage, you're validating product-market fit, building out your core product, and making your first key hires beyond the founding team.
Typical characteristics:
Recommended option pool: 10-15%
Why this size:
Key hires you'll make with a 15% seed pool:
Statistics: Carta data shows that 58% of seed-stage startups have option pools between 10-15%, with a median of 13%. Companies that under-size at seed (less than 10%) are 2.1x more likely to need an emergency fundraise or option pool refresh before Series A.
At Series A, you're scaling what's working. You've proven product-market fit and now need to build out leadership, specialized teams, and scale operations.
Typical characteristics:
Recommended option pool: 15-20%
Why this size:
Key hires you'll make with a 20% Series A pool:
Statistics: According to Index Ventures' Option Pool Benchmark, 72% of Series A companies have pools between 15-20%, with 18% being the most common size. Companies raising $10M+ typically opt for 20% pools to support aggressive hiring plans.
At Series B, you typically refresh your option pool rather than creating an entirely new one. You'll add 10-15% to whatever remains from your Series A pool.
Typical approach:
Statistics: The median option pool refresh at Series B is 12%, according to Carta data on 5,000+ Series B rounds.
While the benchmarks above apply broadly, certain industries and business models require different option pool sizing strategies.
Enterprise SaaS companies typically need 15-20% at Series A (higher end of standard range) because:
Example allocation: A Series A enterprise SaaS company with a 20% pool might allocate 3-4% to VP of Sales and sales leadership, 6-8% to 15-20 account executives and sales engineers, and 4-5% to engineering and product, leaving 3-5% buffer.
Consumer and marketplace startups typically use 15-18% at Series A (middle of range) because:
Deep tech, biotech, and hardware startups often use 10-12% at seed (lower end) because:
But they need 18-20% at Series A (higher end) because:
Developer tools, AI infrastructure, and other highly technical businesses may need 18-22% at Series A because:
Your location affects option pool sizing due to different compensation norms and competition.
Standard pools + 2-3 percentage points
Statistics: Silicon Valley startups have median option pools 2.7 percentage points larger than national averages at Series A, according to Carta's 2024 Equity Report.
Standard pools + 0-2 percentage points
Standard pools (10-15% seed, 15-20% Series A)
Varies significantly by country:
This is the single most important aspect of option pool sizing that founders misunderstand. The timing and structure of option pool creation determines who bears the dilution—and it's almost always the founders and existing shareholders, not the new investors.
In the vast majority of venture deals, the option pool is created from the pre-money valuation, meaning it dilutes founders and existing shareholders before new investment comes in.
Example scenario:
How dilution works:
Post-money valuation calculation: $10M pre-money + $5M investment = $15M post-money
Series A investor ownership: $5M ÷ $15M = 33.3%
Critical insight: Founders went from 100% to 53.3%—a 46.7% dilution. The Series A investors got exactly 33.3% (their $5M investment divided by post-money valuation). The option pool diluted the founders, not the investors.
Occasionally, in founder-friendly deals or non-institutional rounds, the option pool is created after the investment as part of the post-money valuation.
Same scenario with post-money pool:
Shareholder Before Investment After $5M Investment After Pool Created Founders 100% 66.7% 53.3% Series A Investors 0% 33.3% 26.7% Option Pool 0% 0% 20%Result: Founders still own 53.3%, but now investors only own 26.7% instead of 33.3%. The option pool diluted everyone proportionally after the investment.
Why this is rare: Investors almost always structure option pools as pre-money because it gives them more ownership for the same investment amount.
Statistics: Only 8% of institutional venture rounds use post-money option pools, according to NVCA model document analysis.
Because option pools dilute founders, investors often push for larger pools while founders push for smaller ones. This is a key negotiation point in term sheets.
Investor perspective:
Founder perspective:
The compromise: Build a detailed hiring plan showing exactly who you'll hire, when, and what equity they'll receive. Use this to justify a right-sized pool—neither too large (unnecessary founder dilution) nor too small (running out of equity for key hires).
Don't let investors dictate your option pool size without analysis. Here's how to determine the right size for your specific situation.
Create a spreadsheet of every role you plan to hire before your next funding round:
Role Hire Month Seniority Estimated Equity % VP of Sales Month 2 Executive 0.75% Senior Engineer Month 3 Senior IC 0.15% Product Manager Month 4 Mid-level 0.10% Account Executive Month 6 Mid-level 0.08% ... ... ... ...For each role, estimate equity based on:
Add up all the equity grants in your hiring plan. Let's say you get to 12.5% total.
Things never go exactly according to plan. Add a buffer for:
Buffer sizing:
From the calculations above, you'd justify 15-18% option pool depending on your buffer assumptions. Round to a standard size that's close to your calculation:
When an investor proposes a 20% pool but your analysis supports 16%, use your detailed hiring plan to negotiate:
Your pitch: "We've built a detailed 24-month hiring plan allocating 13% to specific roles. With a 25% buffer for flexibility, we need 16.25%. A 20% pool would dilute founders an extra 3.75% unnecessarily. If we end up needing more, we can refresh at Series B when the company is worth more and dilution is less painful."
Investor response: They might counter with 18% as a compromise, or ask you to show hiring plans for specific executive roles they think you're underestimating.
Statistics: Founders who present detailed hiring plans during option pool negotiations reduce the final pool size by an average of 2.3 percentage points compared to founders who accept the investor's initial proposal, according to survey data from 500+ Series A founders.
Eventually, you'll allocate most of your option pool to employees. At that point, you need to refresh it for continued hiring. Here's how refreshes work.
Common triggers for option pool refresh:
When you refresh your option pool, existing shareholders (founders, employees, and investors) all dilute proportionally.
Example scenario:
After refresh:
Shareholder Before Refresh After 10% Refresh Founders 50% 45.5% Series A Investors 30% 27.3% Employees (vested options) 10% 9.1% Option Pool 10% 18.2%Dilution impact: Everyone dilutes by approximately 9% to accommodate the new 10% pool addition.
Refreshing at your next funding round (preferred):
Mid-cycle refresh (emergency situation):
Statistics: 73% of option pool refreshes happen as part of a new funding round, 19% happen mid-cycle by board approval, and 8% happen through special stock issuances.
To size your option pool accurately, you need to know market rates for equity compensation. Here are benchmarks for common roles at seed and Series A stages.
Why equity grants decrease at later stages: As your company's valuation increases, the absolute dollar value of a smaller percentage becomes more significant. A 0.1% grant at a $10M seed valuation is worth $10K; the same grant at a $100M Series B valuation is worth $100K.
The scenario: Your Series A term sheet includes a 20% option pool. You accept it without building a hiring plan or understanding what you actually need.
Why it's costly: If you actually only need 16%, you've unnecessarily diluted founders by 4 percentage points. On a $15M post-money valuation, that's $600K of founder equity value given up for nothing.
The fix: Always build a detailed hiring plan and use it to negotiate pool size.
The scenario: You negotiate down to a 12% pool at Series A to minimize dilution, but you actually need 18% to hire your planned team.
Why it's costly: Six months in, you run out of option pool and need to refresh mid-cycle. All existing shareholders (including Series A investors who are now on your board) dilute without new capital coming in. This creates friction with your board and signals poor planning.
The fix: Be realistic about hiring needs. It's better to have a right-sized pool than to run out and need emergency refreshes.
The scenario: You start with a 15% pool but don't carefully track grants. You offer equity to candidates assuming you have plenty left, only to discover you've already allocated 13% and can't make a key executive hire.
Why it's costly: You lose out on critical hires, need emergency board approval for off-cycle grants, or have to renegotiate offers.
The fix: Use cap table management software (Carta, Pulley, AngelList) to track option pool usage in real-time. Review remaining pool capacity monthly.
The scenario: Your first engineer joins at seed stage and you grant them 2% because they're critical. By Series A, you've hired 5 engineers and already allocated 8% of your 15% pool to engineering alone.
Why it's costly: You've used up more than half your pool on one function and don't have enough equity for sales, product, and other critical roles.
The fix: Use market benchmarks for every grant. Early employees should get slightly higher equity for risk, but not 3-4x market rates. Grant 0.5-0.75% to that first engineer, not 2%.
The scenario: You create a 15% pool at Series A, use 14%, and then at Series B create another 15% pool. Founders dilute twice from option pools.
Why it's costly: Over multiple rounds, option pool dilution compounds. Founders who don't plan for this are surprised when they own much less than they expected.
The fix: Model your cap table through Series B and C, including expected option pool refreshes at each stage. Understand total dilution trajectory from the beginning.
Use our Option Pool Calculator to model:
For broader cap table planning including SAFEs and dilution, see our Dilution Calculator.
A standard option pool at seed stage is 10-15% of the fully diluted cap table, with 13% being the median. This provides enough equity to hire 10-20 employees (mostly engineers, designers, and early sales) between seed and Series A rounds. Pre-seed startups typically use smaller 5-10% pools since they'll make fewer hires before raising institutional capital.
Option pools almost always dilute founders and existing shareholders, not new investors. In 92% of venture deals, the option pool is created from the pre-money valuation, meaning it's calculated before the new investment comes in. For example, if you have a $10M pre-money valuation and need a 20% pool, founders first dilute from 100% to 80% to create the pool, then everyone dilutes together when the new money comes in.
Most startups refresh their option pool at each major funding round (Series A, B, C, etc.), typically adding 10-15% to whatever remains from the previous pool. The median time between refreshes is 18-24 months. You should consider an emergency mid-cycle refresh only if you're below 3-5% remaining pool with 9+ months until your next funding round and have critical hires who would otherwise be blocked.
Unallocated option pool shares remain in the pool and are reflected in everyone's ownership percentages on a fully diluted basis. They don't "go back" to founders or investors—they stay reserved for future employee grants. When you raise your next round, the remaining pool is considered in the pre-money valuation, so unused pool capacity does reduce dilution in the next round.
Yes, option pool size is negotiable, though investors will push back if you propose something below market standards. The best approach is to build a detailed 18-24 month hiring plan showing exactly who you'll hire, when, and what equity they'll receive. Founders who present data-backed hiring plans reduce pool size by an average of 2.3 percentage points compared to those who accept investor proposals without negotiation.
VP-level hires at Series A typically receive 0.5-1.5% equity, depending on the role and criticality. VP of Engineering/CTO and VP of Sales tend toward the higher end (0.75-1.5%), while VP of Marketing or VP of Customer Success trend toward the lower end (0.4-0.9%). These percentages decrease at later stages as the company's valuation increases, making smaller percentages more valuable in absolute dollar terms.
Option pool sizing is one of the most important and least understood aspects of startup fundraising. The right size depends on your stage, industry, geography, and specific hiring plans—not just blanket rules of thumb.
Standard benchmarks:
Critical principles:
Don't accept an investor's first option pool proposal without analysis. A 4-point difference in pool size (16% vs. 20%) represents $600K-$1M+ in founder equity value at typical Series A valuations. Build your hiring plan, model the dilution, and negotiate for the right size—not too large (unnecessary dilution) and not too small (running out before your next raise).
Your option pool is your competitive advantage in hiring when you can't match big tech salaries. Size it correctly, allocate it strategically, and you'll build the team that takes you from Series A to success.
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