Startup Equity & Dilution Calculator

What is startup dilution?

Dilution is the fall in an existing shareholder's percentage ownership when a company issues new shares. If you own 1,000,000 of 10,000,000 shares, you hold 10%. If the company then issues 2,500,000 new shares to investors, you still hold 1,000,000 shares, but they now represent 8% of 12,500,000. Your share count did not change; your slice of the company did.

Dilution is not automatically bad. If the new money increases the value of the company by more than the percentage you give up, your stake can be worth more after the round than before it. What matters is knowing how much you are giving up, to whom, on what terms, and how that compounds across several rounds. That is what this calculator is built to show.

Pre-money vs post-money valuation

Pre-money valuation is the value of the company immediately before new money comes in. Post-money valuation is the pre-money valuation plus the new investment. A $2M investment at an $8M pre-money valuation gives a $10M post-money valuation, and the investor owns $2M ÷ $10M = 20%.

The price per share is the pre-money valuation divided by the pre-money fully diluted share count, and that share count is where many founders are surprised. Term sheets often define the pre-money valuation to include an enlarged option pool and any SAFEs or notes converting in the round. Those shares sit in the pre-money, so their cost falls on existing holders and the effective value of the shares you already own is lower than the headline number. The calculator shows this as the effective pre-money for each round.

How founder dilution works

Founders are diluted by every new share the company issues: to priced-round investors, to SAFE and note holders when they convert, and to the option pool. Because each round dilutes whatever ownership was left after the previous one, dilution compounds. Two rounds that each sell 20% leave founders with 64% of what they started with, not 60%.

It helps to read dilution two ways: in percentage points (founders fell from 80% to 64%, a 16-point drop) and relative to the stake held before (founders gave up 20% of their holding). The results show both, flag rounds where founders give up an unusually large part of their stake, and warn when founders collectively fall below the threshold you set. If you are still deciding how equity is split between co-founders in the first place, our co-founder equity split calculator covers that question.

ESOP and option pool dilution

An employee stock option pool (ESOP) reserves shares for future hires. Options count on a fully diluted basis even before they are granted, so a pool dilutes founders from the day it is created.

Investors commonly ask for the pool to be topped up to a target, for example 10% of the post-money fully diluted capitalization, and for the top-up to sit in the pre-money valuation. This is often called the option pool shuffle: because the new pool shares are counted before the investment, only existing holders are diluted by them. A post-money pool, by contrast, dilutes everyone, including the new investors. The calculator models both and shows how many pool shares were added in each round. For how ESOPs work in practice, see our guide to employee stock option plans.

How SAFEs dilute founders

A SAFE (simple agreement for future equity) converts into shares at a later priced round, usually at the lower of a valuation-cap price and a discount to the round price.

The type of SAFE matters. With a post-money SAFE, the form widely used since 2018, the holder's percentage is effectively fixed before the round: a $1M SAFE with a $10M post-money cap converts into roughly 10% of the company immediately before the new money, and several post-money SAFEs do not dilute each other. That dilution falls on founders and other existing holders. With an older pre-money SAFE, conversion is measured against a capitalization that excludes the SAFEs themselves, so SAFE holders dilute each other as well as the founders.

Stacking several SAFEs before a priced round is one of the most common reasons founders are surprised by their ownership after a seed or Series A. The calculator converts each SAFE separately and shows the cap price, the discount price and the price actually used. Our guide to SAFEs and early-stage funding instruments covers the terms in more detail.

Convertible notes

A convertible note is a loan that converts into equity at a future financing, usually with a valuation cap and a discount, much like a SAFE. The difference is that a note accrues interest, and the interest normally converts too. A $250,000 note at 8% simple interest that converts after 18 months converts as about $280,000, so the holder receives more shares than the principal alone would buy.

Notes also have a maturity date. If a priced round has not happened by then, the outcome depends on the note's terms: repayment, an extension, or conversion at a pre-agreed price. The calculator accrues interest from the issue date to the round's closing date, simple or compounded annually, and flags notes that would have matured before the round closes. See what founders need to get right in a convertible note.

What is a cap table?

A capitalization table, or cap table, records who owns what: founders, employees, advisors, investors, options and convertible instruments, and the class of shares each holds. Two views matter. Issued and outstanding ownership counts only shares that have actually been issued. Fully diluted ownership also counts granted options and the unallocated option pool, as if all were exercised. Investors price rounds on a fully diluted basis, so that is the default view here; you can switch to issued and outstanding in the results.

Unconverted SAFEs and notes are not shares yet. They join the cap table only when they convert, which is why a cap table that looks clean before a round can change significantly at the round itself. Our founder's guide to cap tables and fully diluted ownership explains the mechanics.

Modelling multiple funding rounds

Each round is priced off the fully diluted share count left by the previous one, so pool top-ups, conversions and pro-rata investments in one round carry into the next. Add pre-seed, seed, Series A and later rounds to see ownership after each one, along with a round-by-round timeline of founder, investor and ESOP ownership.

Advanced mode also covers pro-rata (follow-on) investment by existing investors, secondary sales in which an existing holder sells shares to a new buyer without any new shares being issued, down rounds priced below the previous round, and basic broad-based weighted-average or full-ratchet anti-dilution for earlier preferred shares. Before agreeing terms for any round, read what founders should never agree to in a term sheet.