The ESOP pool sizing worksheet
A pool sized to a round number is a pool an investor can push around. Sized to a named hiring plan, it is defensible. This worksheet takes you from the hires to the pool, and through the pre-money versus post-money decision that quietly moves ownership. Full reasoning: ESOP pool sizing.
Work through it in order. Steps one and two size the pool; step three is the negotiation that decides who pays for it.
List the hires, not a percentage
Size the pool bottom-up from real roles.
- List every senior hire you plan in the next 12 to 18 months.
- Attach an equity band to each role, at market for your stage.
- Add a buffer for the hires you cannot yet name.
Total it, then express as a percentage
Convert the plan into a pool size.
- Sum the equity across the roles above.
- Express that as a percentage of the fully diluted cap table. That is your pool.
- Sanity-check against stage norms, but let the plan lead, not the norm.
Decide pre-money or post-money
This is where real ownership moves.
- Pre-money pool: the dilution falls on existing shareholders, mostly founders.
- Post-money pool: the dilution is shared with the incoming investor.
- Know which is on the table and negotiate it deliberately.
Model the dilution both ways
See the number before you agree it.
- Run the cap table with the pool pre-money and post-money.
- Read the difference in founder ownership; it can be several percent.
- Full reasoning: ESOP pool sizing.
Grant entity and employee tax
Who grants, and how it is taxed, matters as much as the size.
- Which entity grants the options, and can it? An LLP cannot run a normal pool.
- How are options taxed for the employee in your jurisdiction?
- If a flip is coming, how do existing grants carry over?
Plan the refresh
Pools are topped up; plan for it.
- Expect a top-up at each round as the team grows.
- Size each pool to a real plan rather than over-provisioning early.
- Track allocated versus unallocated so you refresh before you run out mid-hire.
Size the pool to the plan, and negotiate the timing. The two levers that decide what a pool costs you are how big it is and whether it is created pre-money or post-money. A pool built from named hires, with the dilution modelled both ways, is a term you can defend, rather than a default you accept.
Sizing a pool, or reading a term sheet?
Send us your hiring plan and the term sheet, and we will size the pool to real hires, model the dilution both ways, and tell you what to negotiate before you sign.
Want this as a PDF in your inbox?
Email us and we will send the current version, and the updated one each time the law moves. Or print the page: it is built for paper.
This worksheet is general information for founders, not legal, tax or financial advice for your specific cap table. Market norms and the tax treatment of ESOPs across India and the US change; confirm every point against current law before relying on it. Have the cap table modelled before you sign a term sheet.
Prepared by Infinilex Consultancy · infinilex.io · Verified as of 3 July 2026. Printed copies date; check infinilex.io/resources/ for the current version.