Raising outside capital is the moment a startup stops being wholly yours. Every dollar an investor writes a check for buys a slice of the company, and the size of that slice depends on one number: the post-money valuation. This investor equity calculator takes your pre-money valuation, the amount you are raising, and your current shares outstanding, and instantly shows the investor's ownership percentage, how much the founders get diluted, the price per share, and exactly how many new shares have to be issued.
Whether you are a founder negotiating a seed round, an angel checking a term sheet, or an employee reading an offer letter with equity, the math is the same three lines. Smekys built this tool so you can run the numbers in seconds and understand the dilution before you sign.
How to Use
- Enter the Pre-Money Valuation — the value the parties agree the company is worth before the new cash arrives. This is negotiated, not computed, so it is the single most important number on the page.
- Set the Investment Amount — the cash the investor wires into the company in this round.
- Enter the Existing Shares Outstanding — the total shares held by founders and any earlier holders right before this round. This is only needed to derive price per share and new share count.
- Read the result card: the post-money valuation, the investor's ownership, your own ownership after dilution, the price per share, the new shares issued, and the total share count after the round.
- Slide the investment amount up and down to see how ownership moves. Raising more money buys the investor a bigger slice and dilutes founders further, even though the pre-money valuation did not change.
The core split is deliberately simple: the investor owns the fraction of the company that their money represents of the post-money value.
The Equity Formula
Venture deals use the standard post-money split taught in every seed accelerator and used by term sheets worldwide:
Post-Money = Pre-Money + Investment
Investor Ownership = Investment ÷ Post-Money
Founder Ownership After = 1 − Investor Ownership
Price Per Share = Pre-Money ÷ Existing Shares
New Shares Issued = Investment ÷ Price Per Share
Worked on the classic example: a company is valued at $2,000,000 pre-money and an investor puts in $500,000. The post-money valuation is $2,500,000. The investor owns $500,000 ÷ $2,500,000 = 20%, and the founders are diluted from 100% down to 80%. If the founders held 1,000,000 shares, the price per share is $2,000,000 ÷ 1,000,000 = $2.00, and the investor receives $500,000 ÷ $2.00 = 250,000 new shares, leaving 1,250,000 shares outstanding after the round.
Notice the subtle point: a $500,000 check on a $2,000,000 pre-money company costs the founders exactly 20% of the company. The same $500,000 on a $4,500,000 pre-money company would only cost founders 10%. That is why valuation is the headline fight in every term sheet.
Pre-Money vs Post-Money
The two phrases get mixed up constantly. Pre-money is what investors agree the business is worth today, before their check clears. Post-money is that number plus the new cash. Because the cash lands in the company bank account, the post-money value is what everyone's stake is theoretically worth the day after closing. Founders often anchor on the pre-money number when they brag about a raise, but the investor actually cares about the post-money because that is what their percentage multiplied by.
How Dilution Builds Across Rounds
A single round is easy, but dilution compounds. If founders start at 100% and sell 20% in a seed round, they own 80%. In a Series A they might sell another 20% of the post-money company, which cuts their 80% to 64% — not 60%. Each later round applies the new dilution to the already-diluted pie. Running this calculator after every conversation lets you track exactly what you would be left holding, and catch a co-founder or employee option pool that quietly shrinks your stake further.
Examples
Example 1 — The standard seed round. Pre-money $2,000,000, raise $500,000, 1,000,000 existing shares. Post-money is $2,500,000; the investor takes 20%, founders hold 80%, price per share is $2.00, and 250,000 new shares are issued. This is the textbook split.
Example 2 — A larger raise on a higher valuation. Pre-money $5,000,000, raise $1,000,000, 1,000,000 existing shares. Post-money is $6,000,000; the investor owns $1,000,000 ÷ $6,000,000 = 16.67%, founders keep 83.33%, price per share is $5.00, and 200,000 new shares are issued. Even though the raise doubled, the founder gave away less because the valuation rose faster.
Example 3 — A small bridge check. Pre-money $1,000,000, raise $0, the company does a clean round with no new investor. Post-money stays $1,000,000; the investor owns 0%, founders remain at 100%, no new shares are issued. Use this to verify the engine and to model what happens before any money actually arrives.
FAQ
How much equity does an investor get for a $500,000 investment?
It depends entirely on the post-money valuation. On a $2,000,000 pre-money deal, post-money is $2,500,000 and the investor gets 20%. On a $4,500,000 pre-money deal, post-money is $5,000,000 and the same $500,000 buys only 10%. Enter your own numbers above to see the exact split.
What is the difference between pre-money and post-money valuation?
Pre-money is the agreed value of the company before the new investment. Post-money is pre-money plus the investment. Investor ownership is always calculated against the post-money number, never the pre-money number.
How does raising more money dilute the founders?
Every dollar raised becomes a new slice of the post-money pie. If founders start at 100%, their stake after the round equals 1 minus the investor ownership percentage. Raising a larger amount at the same pre-money valuation always dilutes founders more, even though the company bank account is bigger.
How is price per share calculated?
Price per share equals the pre-money valuation divided by the existing shares outstanding. It is the negotiated price the new investor pays for each new share. Once you know that price, the new shares issued are simply the investment amount divided by the price per share.
Do option pools add extra dilution?
Yes. This calculator models a single clean round. Real term sheets often carve out an employee option pool before the new money, which dilutes only the founders and earlier holders, not the new investor. Always check whether the option pool is sized pre-money or post-money before you rely on a quoted percentage.
Is the investor's ownership guaranteed to stay the same?
No. In future rounds the investor gets diluted along with everyone else unless they participate pro-rata to keep their percentage. Early employees and founders usually see their percentages fall each round, while their dollar value can still rise if the valuation climbs.
Disclaimer
This investor equity calculator is provided for informational purposes only and does not constitute legal, tax, investment, or accounting advice. It assumes a single clean round with no option pool, convertible notes, SAFEs, warrants, or anti-dilution adjustments, none of which are modeled here. Actual cap tables are governed by your shareholders' agreement and articles of incorporation. Always confirm final ownership, share counts, and valuation with your lawyer and a licensed financial professional before closing any investment.