Smaller option pool = less dilution?
I just got a job offer from a startup and as part of the compensation negotiation, the CEO is offering less equity on the basis that "since the option pool is smaller than typical (~8% rather than 10-15%) the offered equity is less dilutable over time."
Is there any truth to this? I've been trying to find literature online to this end but haven't found anything substantial.
Sounds like BS. All the shares in the option pool have already been issued, just not granted. Issuing fewer shares in the option pool doesn't mean there is less dilution because there are fewer shares to grant. At any later date the company can issue an arbitrary number of new shares for investors, new (larger) option pool, etc. They can dilute you down to nothing whenever they feel like it.
Dilution depends on future rounds and company performance. Consider if in three years they have to give up serious equity for enough funds to keep operating, or have a down round