Definition
The practice where investors force a startup to create or expand the employee option pool before a funding round, effectively diluting founders rather than new investors. It's a clever way to pay employees with founder equity.
Example Usage
During Series A negotiations, the VCs insisted on an option pool shuffle, increasing the pool to 15% and diluting the founders by an additional 5%.
Origin
Term emerged in startup legal circles as this practice became standardized in the 2000s
Fun Fact
The option pool shuffle is so common that experienced founders negotiate the 'post-money' option pool size to avoid this dilution tactic.
Source: Venture capital term sheet negotiation terminology
Related Terms
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See “option pool shuffle” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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