Equity Dilution Calculator
Model founder + employee ownership through funding rounds. Inputs: initial cap, round sizes, post-money valuations, option pool top-up. Free.
Equity Dilution Calculator
Model founder ownership through funding rounds. Each round dilutes existing shareholders by (round size ÷ post-money valuation). The tool tracks founder %, option pool %, and external investor % across seed through Series C, plus the value of the founder stake at each post-money valuation. Give a round a pool target and the tool tops the pool up before the round — the "option pool shuffle".
📋 Starting position
💰 Seed round
🚀 Series A
🚀 Series B
🚀 Series C
Round-by-round dilution table
| Round | Raised | Post-money | Founders' pre-money | Sold | Pool top-up | Founder % after | Founder $ after |
|---|
Cap table after the last round
| Holder | Ownership |
|---|
How to Use the Equity Dilution Calculator
Set starting cap table
Founder ownership and the option pool reserved for employees, as percentages of the fully diluted company. If they add up to less than 100%, the rest is shown as other early holders (advisers, angels) and dilutes like everyone else.
Enter round size + post-money
For each fundraising round, enter the amount raised and the post-money valuation. Pre-money is post-money minus the raise. Use the figures from your own term sheet; the tool's defaults (USD 2M at USD 10M post, then 8/40, 20/150, 40/400) are a worked example, not a benchmark.
Read the dilution table
Each row shows the dilution percentage at that round (= size ÷ post-money) and the founder's resulting ownership. On the tool's default rounds the dilutions are 20%, 20%, 13.3% and 10%, which takes a founder from 80% to 39.9% — dilution multiplies, it does not add.
Compare founder $ value to dilution
The math that matters for founders: owning 80% of USD 5M (USD 4M) vs 20% of USD 400M (USD 80M). Dilution is bad in percentage terms but typically wealth-positive in absolute terms if rounds are up-rounds at growing valuations.
Equity Dilution — The Math Every Founder Has to Internalise
The Post-Money Dilution Formula
Each funding round, the new investors buy a share of the company equal to: investment ÷ post-money valuation. If you raise USD 5M at a USD 25M post-money, investors buy 20% of the company. Existing shareholders (founders, employees, prior investors) collectively go from 100% to 80% — each slice shrinks by the same 20%. In an up round that holds for every existing holder; anti-dilution provisions on earlier preferred stock only adjust when a later round is priced below theirs.
Y Combinator's post-money SAFE, its standard since 2018, made this the operating baseline for early-stage US rounds: the cap is the valuation after the money goes in, so the ownership sold is simply investment ÷ cap. What compounds is the sequence. Four rounds selling 20%, 20%, 13.3% and 10% — the tool's defaults — leave a founder with 80% × 0.80 × 0.80 × 0.867 × 0.90 = 39.9%, not 80% minus 63.3%.
Option Pool Expansion — The Hidden Dilution
Investors commonly ask for the option pool to be enlarged before their money goes in, so the new options dilute only the existing shareholders — the "option pool shuffle". The arithmetic: for the pool to be P after a round selling s, it must be P ÷ (1 − s) just before it. Worked through the tool: founders at 90% with a 10% pool raise USD 5M at a USD 25M post-money (20% sold). With no top-up the founders end at 72%. With a 15% pool required after the round, the pool must first become 18.75%, and the founders end at 65%; with 20% required, at 60% — 12 points lower, not the 10 points the pool sizes alone suggest. Set a pool target on any round above to see it, along with the founders' effective pre-money: the headline pre-money less the options created inside it.
The pool expansion serves a real purpose — equity for the hires the new money is meant to pay for — but its size is a negotiable term with a direct cost to the existing holders. Model the shuffle before agreeing to it, and size the pool to an actual hiring plan.
Dilution multiplies rather than adds, and it is paid in percentage points while the reward, if it comes, is paid in valuation.
Up-Round vs Flat vs Down-Round — Where Dilution Becomes Pain
Dilution is mathematically necessary when raising new capital. The question is whether the round is at a higher valuation (up-round), the same valuation (flat), or lower (down-round). Up-rounds are good for everyone — even after dilution, founder $ value typically grows. Flat rounds preserve $ value (dilution offset by no valuation lift). Down-rounds destroy founder $ value — a USD 100M valuation dropping to USD 60M while raising USD 10M means a founder owning 30% sees that stake fall from USD 30M to USD 18M before the new round's own dilution.
A down round can also trigger the anti-dilution provisions on earlier preferred stock. The two common forms are full ratchet, which resets the earlier investors' conversion price to the new, lower price, and weighted average, which moves it part of the way; broad-based weighted average is the milder version for founders. Either way the earlier investors convert into more shares, and the common stock is diluted further.
Dilution multiplies: four rounds of 20%, 20%, 13.3% and 10% leave 39.9%
Dilution formula: investment ÷ post-money valuation = new investor %. Existing holders dilute pro-rata.
Dilution multiplies across rounds: four rounds at 20%, 20%, 13.3% and 10% leave 49.9% of the stake you started with, not 36.7%.
The "option pool shuffle": a 15% pool after a round selling 20% must be 18.75% before it — and the top-up comes out of the existing holders only.
The YC post-money SAFE has been Y Combinator's standard since 2018 — the cap is the valuation after the money goes in, so ownership sold = investment ÷ cap.
On the tool's default rounds, founder ownership goes 80% → 64% → 51.2% → 44.4% → 39.9%.
The option pool dilutes founders too — it is carved out of the pre-money cap table, so every unissued share in it is ownership the founders have already given up.
Anti-dilution provisions — full ratchet or weighted average — protect earlier preferred investors only when a later round is priced lower.
Pro-rata rights let prior investors participate in future rounds to maintain ownership.
Cap-table platforms such as Carta publish round benchmarks by stage and sector — useful for sanity-checking a term sheet against the market.
A flat round still dilutes. Raising USD 10M at the previous round's USD 100M as the new pre-money (USD 110M post) sells 9.09% of the company; the stake's value is unchanged, its percentage is not.
Frequently Asked Questions
- Equity dilution is the reduction in existing shareholders' ownership percentage when a company issues new shares. Most commonly happens when raising new capital — the new investors get shares, increasing the total share count, so existing holders' fractional ownership drops. Math: if a company has 100 shares and you own 30 (30%), then issues 25 new shares to a new investor, you now own 30 of 125 (24%) — a 20% reduction in your percentage.
- Post-money = pre-money + new investment. If you raise USD 5M at a USD 20M pre-money, post-money is USD 25M, and the new investors own 5M ÷ 25M = 20%. Y Combinator's SAFE has been post-money since 2018: ownership sold is the investment divided by the post-money valuation cap. That cap is "post" all the money raised on SAFEs and the options existing before the priced round, but not the priced round's own money or any pool increase adopted with it (YC), so a pool shuffle in the next round still dilutes the SAFE holders along with the founders.
- It is set by arithmetic, not convention: each round sells size ÷ post-money. A USD 8M round at a USD 40M post-money sells 20%, whatever the stage is called. Put your own round size and post-money into the tool and read the compounding — four rounds at 20%, 20%, 13.3% and 10% take a founder from 80% to 39.9%.
- A term under which the option pool is enlarged before the new money goes in, so the enlargement dilutes the existing shareholders rather than the new investors. For the pool to be P after a round selling s, it must be P ÷ (1 − s) beforehand. Example: founders 90%, pool 10%, a Series A selling 20% that requires a 20% pool afterwards — the pool must first become 25%, and the founders end at 60% instead of 72%. The investor's price is set on a pre-money that already includes the new options, which is why the founders' effective pre-money is lower than the headline one; the round table shows both.
- A clause in preferred-stock terms that protects earlier investors when a later round is priced below theirs. Two forms: full ratchet, which resets the earlier investors' conversion price to the new price whatever the size of the new round, and weighted average, which moves it only part of the way, in proportion to how much stock is sold at the lower price; broad-based weighted average counts more of the existing shares and so moves it least. Either way the earlier investors convert into more shares, which partly restores their ownership at the founders' expense. It has no effect in an up round.
- Mostly no, IF rounds are up-rounds. Owning 25% of USD 400M (USD 100M) is dramatically better than owning 80% of USD 5M (USD 4M). Dilution is the price of capital that is meant to grow the company faster than it shrinks your share. The exception: if you're forced into down-rounds where dilution happens at lower valuations than prior rounds — that destroys real $ value. Anti-dilution provisions on prior preferred can compound this pain. Manage the cap table aggressively in up-rounds; defend it aggressively in challenging market conditions.
- Pools are sized to cover the equity grants a company expects to make over the next 12-24 months, so the number follows the hiring plan rather than a fixed standard. What matters for your cap table is that the pool is carved out pre-money: put the size your investor is asking for into the tool's starting option pool field and read the founder line.
- A right granted to earlier investors to buy into later rounds in proportion to their current ownership, so their stake is not diluted. If a Series A investor owns 20% and the Series B is USD 10M, buying USD 2M of it — 20% of the round — keeps them at 20%. It is a common ask in US venture terms; it does not change the founders' dilution, only who buys the new shares.
- The arithmetic is identical in any currency: what you give up is the raise divided by the post-money. Round sizes and valuations are typically smaller than US equivalents. Some Singapore-based startups use a US (often Delaware) parent company with a Singapore subsidiary to raise from US investors on US-style terms; whether that suits you is a legal and tax question for your advisers, not a dilution one.
- US investors will usually expect US-style documents — the YC SAFE for early money, and US-style preferred-stock terms for priced rounds — and some will ask for a US parent company, often in Delaware, above the operating company. The parent issues equity to investors and employees; the operating subsidiary holds the business. Setting this up, or "flipping" an existing company into it, has tax, legal and employee-equity consequences that differ by country, so take advice before a term sheet makes it urgent. The dilution arithmetic on this page is the same either way.
Method & sources
How it computes
Each round sells s = size ÷ post-money; every existing holder (founders, pool, other early holders, earlier investors) is multiplied by 1 − s. A pool target P after a round is created before it: the pool becomes P ÷ (1 − s) and the other holders are scaled by (1 − that) ÷ (1 − old pool). Founder value = founder % × post-money. Printed shares sum to exactly 100.00% by largest remainder (RecaCorpFin.dilution).
What this tool implements
- Post-money convention: the valuation includes the new investment, so ownership sold = investment ÷ post-money — the basis of Y Combinator's post-money SAFE, its standard since 2018, on which ownership sold equals the investment divided by the valuation cap.
- Dilution compounds multiplicatively across rounds; it is not the sum of the round percentages. On the defaults the founders go 80% → 64% → 51.2% → 44.37% → 39.94%, keeping 49.9% of their starting stake.
- Option pool shuffle: a pool target is created before the round, so it dilutes only the existing holders; the founders' effective pre-money is the headline pre-money less the options created inside it. Worked example held by the tests: founders 90%, pool 10%, 20% sold, 15% pool after → pool 18.75% before, founders 65% (72% with no top-up).
- Every holder is tracked as a fraction and the fractions sum to 1 after every round (tested to 1e-12); the printed percentages are one largest-remainder split of 10,000 hundredths, so the cap table and the summary tiles add to exactly 100.00%.
- Refused rather than guessed: founders + pool above 100%, a pool of 100%, a round whose size is not below its post-money, a round with only one of size and post-money, a pool target that would leave nothing for the other holders.
- Per YC, the post-money SAFE cap is "post" the SAFE money and the pre-existing option pool but not the priced round's money or a new pool adopted with it, so a pool shuffle at the priced round dilutes SAFE holders with the founders.
Sources
- Y Combinator. Safe financing documents — "The post-money SAFE has been the YC standard since 2018"; on a post-money SAFE "ownership sold equals the investment amount divided by the valuation cap"; the cap is not "post" the equity financing money or a new or increased option pool. https://www.ycombinator.com/documents
- Y Combinator. The SAFE — the open standard for startup fundraising (the page /safe resolves to; worked example: USD 1M for 15% is a USD 6.7M post-money cap). https://www.ycombinator.com/safe
What can make this go out of date
- Nothing is fetched: ownership, round sizes, valuations and pool targets are entered by the user. The model is priced rounds on a post-money basis; it does not convert SAFEs or notes, apply liquidation preferences or anti-dilution adjustments.
Abridged — the full review record for this tool runs longer than the list above.
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