Founder Dilution Calculator
Calculate founder equity dilution through multiple investment rounds.
What this calculator does
This founder dilution calculator shows what happens to your ownership when you raise money. Enter your current ownership percentage, the amount being invested, and the pre-money valuation, and it returns the post-money valuation, your ownership afterward, and the dilution the round costs you.
Ownership percentage is only half the story, which is why the post-money figure matters as much as the dilution figure. A round that cuts your stake from 60 to 48 percent while more than doubling the company's value has left you better off, and the calculator lets you see both sides of that trade at once rather than fixating on the percentage.
When to use it
Use it while a term sheet is still being negotiated, not after signing. Modeling the round at different valuations and check sizes shows how much each negotiating point is genuinely worth, which is often less than founders assume for valuation and more than they assume for the option pool.
It is equally valuable for modeling several rounds ahead. Dilution compounds, so a founder should know roughly where a full seed, Series A, and Series B path leaves them before committing to a venture-scale trajectory at all. For some businesses the honest answer is that a smaller, unfunded company keeps more value in the founders' hands.
Understanding the inputs
Starting ownership is your percentage before the round, after any previous dilution and after accounting for the existing option pool. If SAFEs or convertible notes are outstanding, your true starting position is lower than the cap table suggests, because they convert at this round.
Investment amount is the new money coming in. Pre-money valuation is the agreed value before that money arrives; post-money is simply the two added together, and the investor's percentage is their check divided by post-money. Watch where the option pool sits — if it is created pre-money, it dilutes you alone, and that detail often costs more than a valuation difference of several million.
How is this calculated?
After each round, founder % = Previous % × (1 − round dilution %). Cumulative dilution compounds across rounds.
A worked example
A founder holds 60 percent and raises $1.5 million on a $6 million pre-money valuation. Post-money is $7.5 million, the investor takes 20 percent, and the founder's stake falls to 48 percent. The value of that stake is $3.6 million — precisely what 60 percent of $6 million was worth. The dilution cost nothing in value terms.
Two years later, a Series A raises $8 million at a $32 million pre-money. Post-money is $40 million, dilution is another 20 percent, and the founder holds 38.4 percent worth about $15.4 million. Ownership has fallen by more than a third across the two rounds while the stake's value has grown more than fourfold.
Limitations and assumptions
The model assumes clean pro-rata dilution with no complications. Real cap tables include option pool expansions, SAFEs and notes converting at discounts or caps, anti-dilution ratchets triggered by down rounds, and multiple share classes with different rights — any of which can change the outcome materially.
More importantly, it says nothing about liquidation preferences, which frequently matter more than percentage. In a modest exit, stacked preferences can absorb most of the proceeds before common shareholders receive anything. Model your percentage here, then have a lawyer walk you through the waterfall under several exit scenarios before you sign a term sheet.
Common Questions
- How much equity do founders typically give up per round?
- Fifteen to 25 percent per priced round is the common range, with seed rounds sometimes higher and later rounds lower as a proportion. Add option pool expansion at each round and the cumulative effect is substantial: founding teams often hold 40 to 60 percent after Series A and considerably less by Series C.
- Does dilution actually make me poorer?
- Not by itself. Owning 48 percent of a company worth $7.5 million is the same $3.6 million as owning 60 percent of one worth $6 million. Dilution only destroys value when the money raised fails to grow the company by more than the stake you gave up, which is the real question.
- What is the option pool shuffle?
- Investors often require the option pool to be created or expanded pre-money, which means existing shareholders absorb the entire dilution while the new investor's percentage is protected. A 10 percent pool created pre-money costs founders roughly 10 percent, not the pro-rata share it would cost if created post-money. It is negotiable.
- How do SAFEs and convertible notes affect dilution?
- They defer it rather than avoiding it, and often make it larger than founders expect. Notes converting at a discount or a capped valuation can consume far more equity than the headline amount suggests. Stacking several SAFEs before a priced round frequently produces a dilution figure that surprises everyone at conversion.
- What is pro rata and why do investors insist on it?
- Pro rata rights let an existing investor maintain their percentage by participating in later rounds. Investors want them because their winners are where returns concentrate. For founders it is generally acceptable, though it can crowd out room for a new lead investor in an oversubscribed round.
- Should I take a higher valuation to reduce dilution?
- Not automatically. A valuation you cannot grow into creates a down round later, which triggers anti-dilution provisions, damages morale, and is far more costly than a few extra points now. Raising at a price supported by a realistic 18-month plan is generally better than maximizing the headline.
- What is a liquidation preference and why does it matter more than percentage?
- It determines who gets paid first in an exit. A 1x non-participating preference means investors take their money back or convert, whichever is better. Participating preferences or multiples let them take both. In a modest exit, preferences can consume the proceeds entirely regardless of what your cap table percentage says.
- How much should I own at Series A?
- There is no correct figure, but investors watch whether the founding team retains enough to stay motivated for another five to seven years. A team below roughly 40 percent combined after Series A can raise concerns about incentive alignment in later rounds, sometimes prompting a refresh grant.
- Does dilution apply to my vesting schedule?
- No — vesting governs how you earn your shares over time, typically four years with a one-year cliff, while dilution reduces what each share represents. They are independent. Unvested shares dilute exactly like vested ones, and founders leaving early lose the unvested portion regardless of any dilution that has occurred.
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