Equity Dilution Calculator

Equity dilution happens when a company issues new shares to investors. Founders keep the same number of shares but own a smaller percentage of the company. Post-money valuation = pre-money + new investment. Price per share = pre-money ÷ existing fully diluted shares. New investor shares = investment ÷ price per share.

This simplified model assumes one founder bucket and one new investor on a priced equity round. Real rounds add an option pool refresh, multiple investors, pro-rata rights, and different share classes. SAFEs and convertible notes convert later and dilute separately — use our SAFE calculator for pre-priced instruments.

Example: $8M pre-money, $2M investment, 8M founder shares. Post-money = $10M. Price per share = $1. New investor gets 2M shares. Total 10M shares — founders 80%, investors 20%. If you expand the option pool before the round, founder dilution is larger than this headline math.

Pre-money valuation is negotiated before the wire hits. Post-money is pre-money plus new cash. Investor ownership percentage on a fully diluted basis equals investment ÷ post-money — a $2M check on $10M post-money is 20% regardless of how many shares that represents.

Option pool refreshes are the hidden dilution lever. A term sheet may require increasing the unallocated pool from 8% to 15% before the round closes. Those new pool shares dilute founders first because they are issued from the pre-money cap table.

Preferred stock often carries liquidation preferences, anti-dilution protection, and board seats that this calculator ignores. Economic ownership percentage is still the starting point for understanding how much of the upside you retain after the round.

Worked example with pool refresh: 8M founder shares, 1M existing pool, $8M pre-money, $2M investment, and a 2M-share pool expansion before closing. Fully diluted pre-round becomes 11M shares. Price = $8M ÷ 11M ≈ $0.727/share. New investor shares ≈ 2.75M. Founders drop below 80% even though the headline round was 20% on post-money.

Multiple founders split the founder percentage according to their individual holdings — this tool shows one combined founder bucket. Cap-table software tracks each person separately.

Verify all numbers against your lawyer’s pro forma before signing term sheets. Rounding, fractional shares, and authorized share limits can shift final percentages slightly.

Pro-rata rights let existing investors buy their share of new rounds to maintain ownership — they do not reduce founder dilution unless someone else does not participate.

Anti-dilution provisions in preferred stock adjust conversion prices if the company raises at a lower valuation later — they protect investors but can further compress common shareholder upside in down rounds.

When negotiating, ask for a pro forma cap table showing founder ownership after pool refresh, new money, and all converting instruments — not just the headline "20% for the new investor."

Weighted average anti-dilution is gentler on common holders than full ratchet — term sheet language determines which applies in down rounds.

Shadow preferred and convertible notes may sit off the cap table until conversion — include them in fully diluted models before promising option pool percentages to hires.

Employee option grants dilute when exercised and when reserved in the pool — model future hires as additional pool usage before telling candidates their offer percentage.

Founder secondary sales reduce personal exposure without necessarily diluting others if no new shares are created — distinguish secondary liquidity from primary fundraising dilution when reading cap-table headlines.

Founder voting control can diverge from economic ownership when super-voting shares exist — this calculator shows economic percentages only, not control rights tied to share class.

Bridge rounds priced as notes convert later and are not in this priced-equity snapshot — add converted note shares to investor bucket when modeling fully diluted outcomes.

Post-money option pool sizing affects every stakeholder percentage simultaneously — rerun this estimate whenever the term sheet changes pool size or investment amount before signing.