Founder Equity Dilution Calculator

Dilution is the reduction in your percentage ownership of a company that happens when new shares are issued — most commonly when you raise a funding round or expand an option pool. Your number of shares stays the same, but the total share count grows, so each share represents a smaller slice of the company.

Post-money valuation is simply pre-money valuation plus the new investment amount. If a company is valued at 8,000,000 before the round and raises 2,000,000, the post-money valuation is 10,000,000.

Pre-money is what the company is worth immediately before new capital comes in. Post-money is what it's worth immediately after. The investor's ownership percentage is always calculated against the post-money figure, not the pre-money figure.

When investors require a new or expanded employee option pool, that pool is usually created as a percentage of the post-money cap table. Because it's carved out before the round closes, the cost of the pool falls on existing shareholders — mainly the founders — rather than on the incoming investor.

Investors want their post-round ownership percentage to be exactly what they negotiated, with no further dilution once their check clears. Structuring the pool as part of the pre-money cap table means any future dilution from unallocated pool shares falls on founders, not on the investor.

Seed rounds commonly dilute founders by roughly 15% to 25% in total, once both the new investor's stake and any option pool expansion are accounted for. The exact figure depends heavily on the round size relative to the pre-money valuation.

Series A rounds often dilute existing shareholders by another 15% to 25%, on top of whatever dilution already occurred at seed. After two priced rounds, it's common for founders collectively to hold somewhere between 50% and 65% of the company.

A SAFE (Simple Agreement for Future Equity) doesn't dilute anyone immediately — no shares are issued and no valuation is set at signing. Dilution happens later, all at once, when the SAFE converts into equity at the next priced round, based on its valuation cap or discount.

A valuation cap sets the maximum company valuation used to convert a SAFE or convertible note into shares, regardless of what the company is actually worth at the next round. A lower cap means the SAFE holder converts at a lower effective price, which increases dilution to the founders.

A discount rate gives early investors the right to convert their SAFE into equity at a percentage below the price paid by new investors in the next round — commonly 10% to 25%. Like a valuation cap, a steeper discount increases the number of shares the early investor receives, which increases founder dilution.

Each round dilutes the ownership percentage established by the round before it, not the original founding percentage. A founder who owns 80% pre-seed, then goes through a seed round diluting them to 65%, then a Series A diluting them by another 20%, ends the Series A at roughly 52% — not 80% minus 20% minus 20%.

The option pool shuffle refers to investors requiring the new or expanded ESOP pool to be sized as a percentage of the post-money cap table, then included in the pre-money valuation. It effectively means founders — not the incoming investor — bear the full cost of funding the option pool, which increases founder dilution beyond the investor's own stake.

Not if the company raises equity capital or expands its option pool — issuing new shares mechanically reduces everyone's existing percentage. Founders can only limit dilution by raising smaller rounds relative to valuation, negotiating smaller option pools, or growing the company without external capital.

Anti-dilution provisions protect investors, not founders. They adjust an investor's conversion price if the company later raises a 'down round' at a lower valuation, giving that investor additional shares to offset the drop — which further dilutes founders and other common shareholders.

Full ratchet re-prices all of an investor's existing shares to match the new, lower round price — the most founder-unfriendly version. Weighted-average anti-dilution adjusts the price based on both the size of the down round and how many new shares were issued, producing a smaller, more proportionate adjustment.

Adding a co-founder after incorporation means issuing them shares out of the existing founder pool, which dilutes the original founder's percentage exactly the same way a funding round would — just without any new capital coming in.

Usually yes for standard common stock, where one share equals one vote. Some founders use dual-class share structures to retain outsized voting control even after their economic ownership percentage has been heavily diluted, though this requires setting up the structure before outside investment begins.

A capitalization table lists every shareholder, how many shares or options they hold, and what percentage of the company that represents. An inaccurate cap table can cause serious problems during fundraising or an acquisition, since buyers and investors need to verify exactly who owns what before closing a deal.

Early-stage option pools commonly range from 10% to 20% of the fully diluted post-money cap table, with 10% to 15% typical at seed and pools sometimes expanded further at Series A as hiring plans grow.

Shares reserved in the option pool but not yet granted to any employee remain part of the company's authorized pool. They don't dilute anyone further until they're actually issued, but investors and founders both count them as already 'spoken for' when calculating fully diluted ownership.

Majority economic ownership guarantees control only if voting is proportional to shares and there's no separate board or protective-provision structure. In practice, board composition, voting agreements, and protective provisions negotiated with investors often matter more to real control than the raw ownership percentage.

A down round issues new shares at a lower price per share than the previous round, so a given investment amount buys a larger percentage of the company. This dilutes existing shareholders more heavily than a round at a flat or higher valuation would, and can trigger anti-dilution adjustments that dilute founders further still.

Pro-rata rights let an existing investor purchase enough shares in a new round to maintain their existing ownership percentage. Founders don't typically hold pro-rata rights themselves, so this mechanism protects investors from dilution far more often than it protects founders.

Founders generally want the option pool sized against the post-money cap table but funded partly by the investor — or negotiated as small as is realistically needed for near-term hiring. The larger and earlier the pool is locked into the pre-money valuation, the more of its cost falls on founders alone.

Build a simple multi-round cap table projection: estimate the size and valuation of each expected future round, apply the same post-money and option-pool math round by round, and track how founder ownership compounds downward. Running this exercise before a fundraise helps set realistic expectations for how much of the company founders will still own at exit.