How to use the equity dilution calculator
The calculator builds a fully diluted cap table one round at a time.
- List the founders and their shares. Enter the number of common shares each founder holds before the first outside round. Early employees, advisers or an existing option pool can be added as extra rows; anyone not in a round counts as an existing holder.
- List the rounds in order. For each one enter a name, the pre-money valuation, the investment and the new option pool as a percentage of the post-money shares. Use 0 for a round with no new pool. Add or remove rows for as many rounds as you want to model.
- Read the results. The panel shows each founder’s final ownership, the paper value of the founders’ shares at the last round’s price and the investors’ and pool’s combined stakes. Below it, the chart shows ownership after each round, and three tables give the round-by-round arithmetic, ownership history and the final cap table.
The assumptions
- Every round is a priced equity round, with the price per share set by the pre-money valuation on a fully diluted basis.
- The new pool is created before each round and counted in the pre-money valuation, so it dilutes existing holders but not that round’s investors. Each round’s pool is added on top of earlier ones, as if earlier options had been granted.
- No SAFEs or convertible notes. Their conversion is out of scope here.
- No anti-dilution adjustments, liquidation preferences, secondary sales or option exercises. Ownership percentages are of fully diluted shares.
How each round is calculated
Price per share = (Pre-money − Pool % × Post-money) ÷ Shares before the round
New investor shares = Investment ÷ Price per share
New pool shares = Pool % × Post-money ÷ Price per shareShares before the round are all fully diluted shares after the previous round. Pool % is the new option pool as a share of post-money shares.
Total shares after = Shares before + New pool shares + New investor sharesInvestors in this round own Investment ÷ Post-money; the pool adds Pool %; everyone else shares what is left in proportion to their shares.
A worked example
Founder A holds 6,000,000 shares and Founder B 4,000,000 before any outside money.
Seed. Investors put in $1,500,000 at a $6,000,000 pre-money valuation and require a 10% option pool. The price per share is $0.5250, the round creates 2,857,143 investor shares and 1,428,571 pool shares, and the founders keep 70.0%.
Series A. $8,000,000 at $24,000,000 pre-money with a further 5% pool. The price rises to $1.5680, Series A investors get 25.0%, and the founders fall to 49.0%.
Series B. $20,000,000 at $80,000,000 pre-money and another 5% pool. The price is $3.6750, and the founders end with 36.8% of a $100,000,000 company: 22.1% for Founder A and 14.7% for Founder B.
Over three rounds the company raises $29,500,000. Investors own 49.3% and the option pool 14.0%. The founders’ shares are worth $36,750,000 at the Series B price, which rose 7.0× from the seed price.
Why dilution compounds
Dilution multiplies rather than adds. Each round leaves founders with a fraction of what they had, and the fractions multiply:
| After | Founders keep in this round | Founders own |
|---|---|---|
| Seed | 70.0% of 100% | 70.0% |
| Series A | 70.0% of what they had | 49.0% |
| Series B | 75.0% of what they had | 36.8% |
In each round, the new investors take investment ÷ post-money (20.0%, 25.0% and 20.0% here) and the new pool takes its percentage, and the founders keep the rest of their previous stake. Earlier investors are diluted the same way: the seed investors bought 20.0% but own less after Series A and B, which is why investors often negotiate the right to buy into later rounds to protect their stake.
What changes founder ownership most
Three levers decide how much founders keep, and the calculator lets you test each one:
| Change from the example | Founders after Series B | Founders after Seed |
|---|---|---|
| The example | 36.8% | 70.0% |
| No new option pool in any round | 48.0% | 80.0% |
| Seed at $10.5M pre-money instead of $6M | 40.7% | 77.5% |
| Raise $16M at Series A instead of $8M | 28.9% | 70.0% |
- Valuation. A higher pre-money means fewer new shares for the same money, so investors take a smaller slice. A better seed price helps in every later round too, because the founders start each round from a larger stake.
- Amount raised. Raising more at the same pre-money buys runway but costs ownership. Doubling the Series A in the example takes the founders from 36.8% to 28.9% after Series B.
- Option pools. Pools sized for a real hiring plan cost less than round-number pools. Across three rounds, the pools in the example cost the founders the difference between 48.0% and 36.8%.
Down rounds
When a company raises at a lower price per share than in its previous round, dilution accelerates. If Series B in the example were priced at a $15,000,000 pre-money for $10,000,000, the price per share would fall to $0.6738 from $1.5680, and the founders would end with 26.9% instead of 36.8%.
The real damage is usually worse than that. Preferred stock commonly carries anti-dilution protection, which issues extra shares to earlier investors after a down round, and the founders absorb that too. Liquidation preferences, which pay investors back first in a sale, also matter more when valuations fall. Neither is modeled here, so treat down-round results as a best case.
Percentage versus value
A falling percentage is the price of growth capital, and in a successful company it is more than offset by a rising share price. The useful questions are whether each round’s money increases the company’s value by more than the dilution costs, and how much ownership founders need to stay motivated through the next rounds.
Paper value is not cash. The stake value in the results uses the last round’s preferred price, but founders hold common shares, and in a sale the investors’ liquidation preferences are paid first. At a modest exit, the founders’ share of the proceeds can be well below their percentage.
What this calculator does not include
- SAFE and convertible note conversion, which is out of scope. Converted shares dilute founders on top of the round itself.
- Anti-dilution protection, full ratchet or weighted average, in down rounds.
- Liquidation preferences, participation and dividends, which decide how sale proceeds are split.
- Option grants, vesting and exercises. The pool is shown as one block, granted or not.
- Pro-rata investments by earlier investors. Model them as part of the new round’s investment.
- Secondary sales, where founders sell existing shares to investors.