How an option pool top-up dilutes founders before the round
Most investors want the option pool topped up before they invest, and counted inside the pre-money valuation. That means only the existing shareholders are diluted, not the new investor. In this simplified example, an £8m pre-money offer really values the founders' shares at £7m.
Illustration, simplified. Conditions apply. Not tax advice. Sources: Cooley GO, "Negotiating the Option Pool" https://www.cooleygo.com/negotiating-option-pool/ ; LTSE, "Funding your startup: the impact of the option pool shuffle" https://ltse.com/insights/funding-your-startup-the-impact-of-the-option-pool-shuffle
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