Hi all,
I frequently read Fred Wilson's blog. He does his 'MBA Mondays' and he's currently going through employee equity. I can't post links, but it's his post on Dilution. You can click on MBA Mondays on his site avc.com if you wish to view it.

He explains everything beautifully. I am having trouble understanding this--

"When the 10% option pool is set up, everyone is diluted 12.5% because the option pool has to be 10% after the investment so it is 12.5% before the investment. "

Where is this extra 2.5% coming from? Not entirely understanding the math here.

Thanks for any help!