Option pool refreshes

At Series B and beyond, the pool is often topped up again to about 5–10% available, depending on headcount plans. The same shuffle logic applies unless you negotiate the refresh as post-money (rare when the investor has leverage).

Departures help: unvested cancelled options return to the pool. A company that churns grants may look like it has room without a refresh — until you hire a VP Engineering at 0.6% and discover the available reserve is 0.4%.

The big idea

The pool is a tank with an inflow (cancellations, board expansions) and an outflow (new grants). Refreshes are the moments you reopen the valve, usually during a financing. Hoping attrition will fund a VP hire is not a strategy.

Track three numbers monthly:

1. Available options (ungranted)
2. Outstanding options (granted, unexercised)
3. Burn rate: % FD granted per quarter

When (1) falls below ~6–12 months of planned grants, start the refresh conversation before the financing fire drill. When the pool is empty, stop promising candidates numbers until the board expands it.

The equity incentive plan sets the maximum shares issuable, eligible recipients, ISO limits and administration. The board (or a compensation committee) approves adopting or amending the plan, individual grants (or a budget with officer delegation), and pool increases. Keep grant dates aligned with 409A fairness — backdating is a career-limiting scandal.

Walking through a Series B top-up

Post-Series A: 12,500,000 FD shares, a 15% pool (1,875,000), of which 1,600,000 options are already granted and 275,000 remain available (2.2% of FD). The hiring plan for the next year needs ~6% of current FD in new grants — impossible without expansion.

Series B term sheet: $25M on $100M pre / $125M post (20% new money), and "option pool equal to 10% of fully diluted capitalization immediately after the closing."

After B, if post-money FD becomes 15,625,000 (so $25M buys 20%), a 10% pool is 1,562,500 shares. You already have 1,600,000 outstanding — the "10% pool" might mean available + outstanding totaling 10%, which would require shrinking outstanding (impossible), or, more often, available after close sized so total equity incentives sit near that target. Read the exact language.

Negotiate from the hiring plan: "We need 700k new available options (about 4.5% of post-money) given cancellations we expect; here is the roster." A precise ask beats absorbing a generic top-up.

Common mistakes

• Granting above the reserve. Forces emergency board fixes and angry diligence.
• Ignoring cancellations and overstating need — or the opposite, planning a VP hire from hoped-for attrition.
• Skimming "10% pool" when outstanding already exceeds 10% and assuming you are fine.

Check yourself

Available pool is 2.2% of FD and next year's plan needs 6%. What has to happen?

A refresh — cancellations will not close a 4-point gap.

Why read "10% of fully diluted after closing" with a lawyer?

It may mean available plus outstanding, or a new available reserve on top of grants already out.

Key takeaways

• Refreshes repeat at later rounds; the shuffle usually repeats too.
• Cancellations recycle grants into available; they are not a hiring plan.
• Track available, outstanding and grant burn monthly.
• Size the ask from a roster, not a round number in the term sheet.

Further learning

Carta's primer on strike prices and vesting before you grant or accept options:

Back to the option pool map.