Option Pool Shuffle
Definition
The practice, common in venture capital financing, of requiring that the option pool expansion occurs before the closing of an investment round rather than after, so that the dilution from the pool expansion falls on the pre-money shareholders rather than being shared with the new investor. The option pool shuffle increases the pre-money dilution absorbed by founders and common shareholders and reduces the effective pre-money valuation received.
Common Misapplication
The most common misapplication is accepting a term sheet that specifies an option pool expansion on a pre-money basis without modeling the effective pre-money valuation after the pool expansion. A term sheet stating a ten million pound pre-money valuation with a requirement to expand the option pool from ten to twenty percent on a pre-money basis has an effective pre-money valuation materially lower than ten million pounds.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.3: The Equity Compensation Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Option Pool Shuffle. https://ffistandard.org/glossary/option-pool-shuffle/. 2026.