Raising money is the moment a startup stops being fully yours — and the number every founder wants to see before signing a term sheet is exactly how much of the company they will actually keep. This equity dilution calculator shows, in plain shares and percentages, what happens to founder ownership after a funding round, how much the new investors own, and how an option pool reshapes the cap table.
Dilution sounds abstract, but it is arithmetic. When new shares are created, every existing holder's percentage shrinks because the same number of founder shares now represents a smaller slice of a larger pie. Enter your existing shares, the shares the investors are buying, and any new option pool, and the result card updates instantly.
How to Use
- Enter the Existing Founder Shares — the total shares outstanding before this round. If the company has only founders so far, this is simply the number of shares you issued yourselves.
- Set the New Investor Shares — the number of new shares the investors are purchasing in this round. This is usually the investment amount divided by the price per share.
- Add New Option Pool Shares only if the deal creates a new pool. In most priced rounds the pool is built pre-money, which means it dilutes the founders, not the investors. Leave it at 0 if there is no pool.
- Read the result card: pre-money and post-money share counts, founder ownership before and after, investor ownership, option pool ownership, and the total percentage the founders gave up.
The math is deliberately simple. Post-money shares equal founder shares plus investor shares plus option pool shares. Founder ownership after the round is founder shares divided by post-money shares. Everything else follows from that one ratio.
The Dilution Formula
Equity dilution is the percentage of the company that new shares represent against the enlarged total:
Post-money shares = Existing shares + New investor shares + New option pool shares
Founder ownership after = Existing founder shares ÷ Post-money shares × 100
Where:
- Existing shares are all shares outstanding before the round (founders, angels, any prior converts).
- New investor shares are the shares issued to the incoming investors.
- Option pool shares are newly reserved shares set aside for employees, typically created pre-money.
Worked example: founders hold 1,000,000 shares and raise a round that issues 250,000 new shares. Post-money shares are 1,250,000. The founders now own 1,000,000 ÷ 1,250,000 = 80.0%, the investors own 20.0%, and total dilution is 20.0 percentage points. The founders did not lose shares — their stake simply represents a smaller fraction of a bigger company.
If the round also creates a 100,000-share option pool pre-money, post-money becomes 1,350,000. Founders drop to 74.07%, investors hold 18.52%, and the pool holds 7.41% — the pool cost founders nearly 6 points of extra ownership, which is exactly why pool sizing is one of the most negotiated line items in a term sheet.
Why Dilution Is Not Always Bad
A smaller percentage of a bigger pie can be worth more than a large percentage of nothing. If you own 100% of a company valued at $1,000,000, your stake is worth $1,000,000. After raising $2,000,000 at a $6,000,000 post-money valuation, you own 80% of a company worth $6,000,000 — your stake is worth $4,800,000. You "gave up" 20% of the equity, but you multiplied the value of what you kept. Use this calculator for the ownership percentages; pair it with a valuation calculator to see the dollar outcome.
Two structural points matter most. First, a pre-money option pool dilutes only the existing holders, which is why founders should push to size the pool as small as the company can realistically hire against. Second, each later round dilutes again — ownership compounds downward over Series A, B, and C — so founders should model several rounds at once to see where they land after five years, not just after the next check.
Examples
Example 1 — A clean angel round. Founders hold 1,000,000 shares. An angel invests for 250,000 newly issued shares and no option pool is created. Post-money is 1,250,000 shares; founders own 80.0%, the angel owns 20.0%, and total dilution is 20.0%.
Example 2 — A priced round with a pre-money pool. Same 1,000,000 founder shares and 250,000 investor shares, but the term sheet requires a 100,000-share pool created before the round. Post-money rises to 1,350,000. Founders fall to 74.07%, investors hold 18.52%, the pool holds 7.41%, and total dilution reaches 25.93%. The pool alone cost founders about 5.9 points.
Example 3 — No new shares. If investor shares are 0 and the pool is 0, post-money equals pre-money. Founders stay at 100.0%, and dilution is 0.0% — confirming the engine behaves at the zero boundary.
Example 4 — A larger Series A. With 5,000,000 founder shares, a 1,500,000-share Series A, and a 500,000-share pre-money pool, post-money is 7,000,000. Founders retain 71.43%, the Series A fund owns 21.43%, the pool holds 7.14%, and total dilution is 28.57% on this single round.
FAQ
How is equity dilution calculated?
Dilution is the new shares divided by the post-money share count. First compute post-money shares = existing shares + new investor shares + new option pool shares. Then founder ownership after = founder shares ÷ post-money shares × 100. Total dilution = 100% minus that figure.
What does "pre-money option pool" mean?
A pre-money option pool is created before the new investors' shares are issued, so the dilution from the pool falls entirely on existing holders (founders and earlier investors). A post-money pool is created after the round, so new investors share the dilution. Most term sheets specify a pre-money pool, which is why founders negotiate its size so hard.
How much do founders usually dilute in Series A?
Founders typically give up 15%–25% of the company in a Series A round, and a further 10%–20% in Series B. Combined with a 5%–10% option pool, founders who started at 100% often own 40%–60% by the time a company reaches growth stage. Use this calculator once per round and chain the results.
Does dilution mean I lost money?
Not by itself. Dilution measures ownership percentage, not value. If a $2,000,000 investment buys 20% of your company, your 80% stake in a now-better-funded company is usually worth more than your 100% stake was before the money arrived. Compare the value of your percentage before and after, not just the percentage.
How do I calculate my ownership after multiple rounds?
Run the calculator once per round, feeding the post-money founder percentage forward. If you end Series A at 80% and Series B issues enough new shares to take investors to 20% of the enlarged cap table, your 80% stake shrinks by another 20% — to roughly 64% — because each round dilutes every existing holder proportionally.
What if I enter negative shares?
The calculator rejects negative share counts, because a company cannot have a negative number of shares outstanding. Enter 0 for any component that does not apply (for example, no option pool), but do not enter negative numbers — the math would produce nonsense percentages.
Disclaimer
This equity dilution calculator is provided for informational purposes only and does not constitute legal, tax, accounting, or investment advice. Ownership percentages are based on the share counts you enter and the standard cap-table dilution formula; actual outcomes depend on convertible notes, SAFEs, warrants, preferred-stock liquidation preferences, anti-dilution protection, and the specific terms of your term sheet. Always have your cap table and proposed round reviewed by a qualified startup attorney and accountant before signing.