ESOP Pool Calculator

Size an employee stock option pool, model the dilution it creates, and calculate how many grants of a given size the pool supports.

🤝 Equity📐 Pool shares = total shares × pool % / (1 − pool %) when created pre-money💼 Business

Existing shares outstanding

Target pool size (% post-creation)

Shares already granted

Typical grant size (shares)

Planned hires needing equity

Company valuation

Please enter valid values.

Formula & Reference

Variable	Symbol	Formula	Units
ESOP Pool Calculator	—	Pool shares = total shares × pool % / (1 − pool %) when created pre-money	shares and percent

Step-by-Step Examples

Example 1

Standard Pool

8,000,000 shares, 12% target pool, 380,000 granted, 25,000 typical grant, 24 hires, 40M valuation.

Pool shares = 8,000,000 × 0.12 / 0.88 = 1,090,909
Total after = 9,090,909 — pool is 12.00%
Existing holders diluted 12.00%
Available = 1,090,909 − 380,000 = 710,909
Supports 28 grants of 25,000 — 24 hires need 600,000, sufficient

✓ 1,090,909 shares — supports 28 grants

Example 2

Pool Shortfall

Same pool, but 900,000 already granted and 24 hires planned.

Available = 190,909 shares
24 hires at 25,000 need 600,000
Shortfall of 409,091 — the pool must be expanded before hiring

✓ Shortfall of 409,091 shares

Example 3

Grant Value

1,090,909 pool on 9,090,909 total shares at 40M valuation.

Price per share = 40,000,000 / 9,090,909 = 4.40
A 25,000 share grant is worth 110,000 gross at this valuation
Before strike price, vesting, and tax

✓ 25,000 shares worth 110,000 gross

Real-World Applications

🤝

Talent Competitiveness

An adequately sized pool lets you make competitive equity offers without renegotiating with investors at each hire.

📉

Dilution Planning

Creating the pool dilutes existing holders, so sizing it correctly upfront avoids repeated dilutive top-ups.

📊

Grant Budgeting

Knowing how many grants the pool supports prevents committing equity that has not been authorised.

💰

Offer Credibility

Expressing grants in currency terms at current valuation makes equity compensation tangible for candidates.

Common Mistakes to Avoid

⚠️

Sizing the pool by naive percentage

Creating a 12% pool requires issuing more than 12% of existing shares, because the new shares expand the total. The gross-up matters.

⚠️

Underestimating grants needed

Running out of pool mid-hiring forces an unplanned expansion, which dilutes everyone at a worse moment and can complicate a funding round.

⚠️

Ignoring who bears the dilution

Pools created pre-money in a funding round dilute existing shareholders only, not the incoming investor — a significant economic term.

Frequently Asked Questions

How large should an option pool be? ▾

Commonly 10 to 20% for early-stage companies, sized against the hiring plan and the equity each role will require.

Why does a 12% pool need more than 12% of shares? ▾

Because the new pool shares increase the total share count. The gross-up formula divides by one minus the pool percentage to land at the target.

Who is diluted by pool creation? ▾

Existing shareholders. When created pre-money as part of a financing, incoming investors typically avoid the dilution entirely.

What happens when the pool runs out? ▾

It must be expanded, which requires board and often shareholder approval and dilutes existing holders again — usually at an inconvenient moment.

How do I size grants within the pool? ▾

Typically by role level and stage, expressed as a percentage of fully diluted shares rather than a raw share count, which is meaningless without context.