Equity Dilution Calculator
Free equity dilution calculator: model a funding round for post-money valuation, new-investor and option-pool share, and your ownership and stake value.
Your stake before this round, as a percentage.
New capital coming in from investors this round.
Company value agreed before the new money is added.
New option pool created, as a percent of post-money. Enter 0 to skip.
Results
Post-money valuation
$10,000,000
Pre-money plus the amount raised.
- New-investor ownershipAmount raised ÷ post-money valuation.
- 20%
- Option pool (added)New pool created on the cap table, diluting existing holders.
- 10%
- Your post-round ownershipDown from 60% before the round.
- 42%
- Your stake value (post-money)On-paper value at the round price.
- $4,200,000
- Total dilutionPercentage points of ownership given up in this round.
- 18%
Raising $2,000,000 at a $8,000,000 pre-money puts the company at $10,000,000 post-money and hands investors 20%, plus a 10% option pool. Your 60% stake becomes 42% - worth $4,200,000 on paper, a 18-point dilution.
Free and instant - nothing is stored or sent. Estimates for planning purposes, not accounting, tax, or investment advice.
Every priced funding round dilutes existing shareholders - the question is by how much, and what your stake is worth afterward. This calculator models a single round from four inputs and returns post-money valuation, the new investor’s share, the option-pool share, and your ownership and its dollar value after the round.
It is a planning estimate that treats the round as a clean, single-tranche priced equity raise. Real term sheets add option-pool timing (pre- vs post-money pool), SAFE and note conversions, and pro-rata rights that this tool keeps simple on purpose. Use it to build intuition before you open the cap-table model.
What dilution measures
Dilution is the reduction in your ownership percentage when new shares are issued. Your share count does not change in a priced round - the total number of shares grows, so the same shares represent a smaller slice of a (usually larger) pie. That is why dilution and a higher valuation routinely happen together and are not a contradiction.
The goal is not to avoid dilution - it is to make sure each round buys enough growth that a smaller slice of a bigger company is worth more than the larger slice you held before.
The round math
Post-money valuation = pre-money valuation + amount raised. The new investor’s ownership = amount raised ÷ post-money - raise $2M at an $8M pre-money and investors own $2M ÷ $10M = 20%. An option pool created in the round takes its own percentage of post-money (10% here).
Existing holders absorb both the investor share and the new pool pro-rata: your post-round ownership = current ownership × (1 − investor% − pool%). A 60% founder facing 20% investor plus 10% pool keeps 60% × 70% = 42%. Your stake value is that ownership times the post-money valuation - 42% × $10M = $4.2M.
How to read the result
Total dilution shows the percentage points of ownership you gave up - 18 points in the default example (from 60% to 42%). Compare that against the value created: even at 42% ownership, your paper stake grew because the company is now worth more.
Watch the option pool line: pools created inside the round and counted in the pre-money (the "pool shuffle") dilute founders more than the founders often expect, because they come out of the existing holders’ share before the investor’s money lands. Negotiating pool size and timing is one of the highest-leverage terms in a sheet.
Frequently asked questions
How do you calculate equity dilution in a funding round?
Post-money valuation = pre-money + amount raised. The new investor’s stake = amount raised ÷ post-money. Existing shareholders are diluted pro-rata by that percentage (plus any new option pool), so your new ownership = old ownership × (1 − investor% − pool%). Raising $2M at $8M pre-money gives investors 20% and cuts a 60% founder to about 42% after a 10% pool.
What is the difference between pre-money and post-money valuation?
Pre-money is the company’s agreed value before new investment; post-money is pre-money plus the amount raised. Post-money is what the investor’s percentage is calculated against. A $2M investment at an $8M pre-money means a $10M post-money and 20% for the investor - the same $2M at an $8M post-money would be 25%, so the wording matters enormously.
How does an option pool affect my dilution?
A new option pool issues shares to future employees, diluting existing holders just like an investor does. If the pool is created inside the round and included in the pre-money valuation, founders absorb it before the new money arrives - increasing founder dilution. Negotiating a smaller pool, or having it come out of post-money, meaningfully protects your stake.
Is dilution always bad for founders?
No. Dilution reduces your percentage but the capital and higher valuation usually grow the total value more than the percentage shrinks. Owning 42% of a company worth $10M ($4.2M) beats owning 60% of one worth $4M ($2.4M). Dilution only hurts when a round raises money that fails to create proportionate value.
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