The Employee Stock Option Pool (ESOP) Calculator computes the exact share reserve needed to create or top up an equity incentive pool to attract top engineering and leadership talent. It details post-money dilution and capitalization table impacts.

Mathematical Formula

ESOP Shares to Issue = (Current Outstanding Shares * (Target% / 100)) / (1 - (Target% / 100))

Venture Capital Conventions

  • Seed Stage: Typical unallocated option pool size is 10% to 15%.
  • Series A: Option pool refresh usually resets the available ungranted pool to 10% to 15%.
  • The "Option Pool Shuffle": VCs almost universally mandate that the option pool is created inside the pre-money valuation, causing 100% of the dilution to fall on existing founders.

Frequently Asked Questions (FAQ)

What is the "Option Pool Shuffle"?

It is a common VC term sheet mechanism where the option pool is created pre-investment, effectively lowering the true effective pre-money valuation received by founders.

What is standard startup vesting?

A 4-year vesting schedule with a 1-year cliff (25% vests after 12 months, followed by monthly vesting of the remaining 75% over the next 36 months).