Startup Dilution Calculator
Enter your current cap table, pre-money valuation, and round size to instantly see post-round ownership for every shareholder after the raise.
Round details
Post-money valuation
$6.0M
New investor stake
16.7%
Current cap table
100% balanced- %
- %
- %
- %
Post-round ownership
- Founder 1was 50.0%41.7%
- Founder 2was 30.0%25.0%
- Option Poolwas 10.0%8.3%
- Angel / Pre-Seedwas 10.0%8.3%
- New Investornew16.7%
Your dilution
16.7% reduction
Founder value at post-money
$4.0M
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Start Free TrialWhat is equity dilution and why does it matter?
Equity dilution happens every time you issue new shares - whether in a priced round, a SAFE, a convertible note, or an employee option pool. Each new share reduces every existing shareholder's percentage of the company, even if the absolute value of their stake may increase if the round is at a higher valuation.
For founders, dilution is not inherently bad. Taking on the right investor at the right valuation can accelerate growth far beyond what the lost percentage costs you. The risk is compounding: dilution across multiple rounds - pre-seed, seed, Series A, Series B - can leave founders with a surprisingly small share by the time of exit. Understanding the math at each stage is how you negotiate from a position of knowledge rather than guesswork.
Pre-money vs post-money
Pre-money valuation is what the company is worth before the investment. Post-money is pre-money plus the round size. A $5M pre-money with a $1M raise gives a $6M post-money - and the investor owns $1M / $6M = 16.7%.
Option pool shuffle
Investors often require a 10-15% option pool before calculating their ownership. If the pool is created pre-money, it dilutes founders - not investors. Always clarify whether the option pool is included in the pre-money cap or added on top.
Cumulative dilution
A founder who raises three rounds - giving up 20%, 18%, and 22% respectively - retains roughly 51% before any option pool. Model every future round now, not just the one you are currently raising.
Case study - seed round dilution in practice
How a two-founder SaaS company modelled their seed round and avoided a costly option pool mistake.
Before the raise
Two founders split 60/40. They had granted 8% to an early engineer via options, leaving the cap table at Founder A 55.2%, Founder B 36.8%, Options 8%. They were raising a $1.2M seed round.
- Founder A55.2%
- Founder B36.8%
- Option pool8%
The negotiation
The lead investor offered a $4M pre-money valuation and required a 12% option pool. The first term sheet created the pool pre-money - diluting founders before the investor's percentage was calculated.
Using a dilution calculator, the founders realised this effectively reduced their pre-money to $3.52M. They pushed back and negotiated the pool to 10% created post-money, recovering $160K in implied valuation.
After the raise
- Founder A44.4%was 55.2%
- Founder B29.6%was 36.8%
- Options (existing)6.4%was 8%
- New option pool10%
- Seed investor23%
Post-money valuation: $5.2M. Combined founder stake: 74% - retained majority control.
Three things this founder got right
They ran the numbers before the meeting
Walking into a term sheet negotiation without a dilution model puts you at an immediate disadvantage. Investors see hundreds of deals - founders who understand cap table mechanics earn more trust and better terms.
They challenged the option pool timing
Pre-money option pools are a common term that can cost founders 2-5% of the company. The difference between pre and post-money pool creation is rarely explained in plain language - but the impact is real at any exit.
They modelled the next round too
After closing, they ran a Series A scenario assuming 25% dilution. Combined founder ownership would drop to around 55% - still above majority. Knowing this in advance shaped how they thought about growth targets before raising again.
Frequently asked questions
- How much dilution is normal at seed stage?
- Most seed rounds dilute founders by 15-25%. Below 15% can signal a very high valuation relative to traction; above 25% at seed may make Series A investors cautious about founder motivation. The right number depends on the check size and what the capital enables.
- Does a SAFE dilute me immediately?
- No - a SAFE converts into equity at a future priced round. But SAFEs do dilute you at conversion, and multiple SAFEs can stack in ways that are hard to model without a cap table tool. Always track your total SAFE overhang and model conversion scenarios before your next priced round.
- What is a fully diluted cap table?
- Fully diluted means all shares are counted: issued shares, unissued but reserved option pool, warrants, and any convertible instruments at their assumed conversion price. Investors always calculate ownership on a fully diluted basis - so you should too.
- Should I include my option pool in the pre-money cap table?
- If your option pool is already reserved (authorised but unissued shares), yes - include it. If your investor is requiring a new or expanded pool as a condition of the round, negotiate whether it is created pre- or post-money. The difference can be worth several percentage points of founder ownership.
- How do I know if my valuation is fair?
- Comparable rounds in your sector, investment stage, and location are the most reliable benchmark. Look at recent deals with similar ARR, team size, and market. InvestorDiscover lets you filter by investment stage and investment interest to identify active investors in your space - understanding who funds comparable companies helps you calibrate what valuation expectations are realistic.
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