Equity Dilution Calculator
Free equity dilution calculator for startups. Simulate how funding rounds, ESOP pools, and multiple investors affect founder ownership. Visual waterfall chart and cap table breakdown. No sign-up required.
See how your ownership changes across funding rounds
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| Round | Dilution | Founder % | Founder Value |
|---|---|---|---|
| Founding | — | 100.0% | — |
| Pre-Seed(SAFE) | -10.0% | 90.0% | $3.6M |
| Seed(SAFE) | -10.0% | 81.0% | $8.1M |
How to Calculate Your Equity Dilution
1. Set Your Founding Shares
Enter the total number of shares issued at founding. This represents 100% of the company. A common starting point is 10 million shares, but the exact number doesn't affect percentage calculations — it only matters for share price.
2. Add Your Funding Rounds
For each round (Seed, Series A, B, C), enter the pre-money valuation and investment amount. The calculator automatically computes the investor's ownership percentage and how it dilutes existing shareholders. Toggle ESOP to include option pool dilution at each stage.
3. Analyze Your Dilution
See your founder ownership percentage after each round, the dilution waterfall chart showing how ownership erodes, and a pie chart of your final cap table. Green means healthy retention (40%+), yellow is moderate (25-40%), red signals high dilution risk (below 25%).
4. Compare Scenarios
Sign up to unlock scenario comparison — see how 50% higher or lower valuations would affect your ownership and the dollar value of your stake. Use this to negotiate from a data-backed position.
Key Dilution Terms
- Equity Dilution
- The reduction in each shareholder's ownership percentage when new shares are issued. If you own 100 of 1,000 shares (10%) and the company issues 250 new shares, you now own 100 of 1,250 shares (8%). Your percentage dropped, but if the company is worth more, your dollar value can still increase.
- Pre-Money Valuation
- What the company is worth before receiving new investment. A $10M pre-money with a $2M investment means a $12M post-money valuation, and the investor gets 16.7% ($2M / $12M).
- Post-Money Valuation
- The company's value immediately after investment: pre-money plus investment amount. This determines each investor's ownership percentage.
- ESOP (Employee Stock Option Pool)
- Shares reserved for employee compensation. Typically 10-20% of the company, created from pre-money valuation. This dilutes founders and existing investors but not the new round investors.
- Cap Table
- A capitalization table showing the ownership breakdown of a company: who holds how many shares and what percentage. Updated after every funding round, option grant, and equity event.
- Anti-Dilution Clause
- A provision protecting investors if the company raises a down round (lower valuation). Full ratchet re-prices all shares to the new price. Weighted average adjusts partially based on round size. Broad-based weighted average is the most founder-friendly option.
How to Minimize Unnecessary Dilution
- 1.Raise at the right time, not when desperate. Companies with 8-12 months of runway negotiate from strength. Below 3 months, you take whatever terms you can get.
- 2.Negotiate the ESOP size based on actual hiring plans. Don't accept a 20% pool at seed if you only plan to hire 3 people before Series A. You can always top up later.
- 3.Target 2-3x valuation step-ups between rounds. This ensures your percentage drops less than the value grows — healthy dilution.
- 4.Space rounds 18-24 months apart. Raising every 6-8 months without growth between rounds leads to flat or down rounds — the worst kind of dilution.
- 5.Consider revenue-based financing or venture debt to extend runway without equity dilution. Venture debt typically costs 8-12% interest plus minimal warrant coverage.
- 6.Always clarify whether the option pool comes from pre-money or post-money. Over 95% of term sheets specify pre-money — meaning it dilutes you, not the investor.
Frequently Asked Questions
Equity dilution is the reduction in each shareholder's ownership percentage when a company issues new shares. It happens during funding rounds, ESOP creation, and convertible note conversions. Your percentage drops, but if the company grows, the dollar value of your stake can still increase.
Median dilution per round is Seed 19.5%, Series A 18%, Series B 14%, Series C 10% based on Carta data from 2,005 US software startups. Anything above 25% in a single round should raise concerns.
Employee stock option pools (ESOP) are typically created from the pre-money valuation, meaning they dilute founders and existing investors — not the new investors. Standard sizes are 10-15% at Seed and 15-20% by Series B. Over 50% of companies use less than half their allocated pool.
The median founder-CEO owns about 8-10% at IPO. The top two co-founders combined hold roughly 24%. After multiple rounds plus ESOP dilution, founders experience approximately 64% total dilution by Series C.
The option pool shuffle occurs when investors require a stock option pool to be created from the pre-money valuation. A $30M pre-money with a 15% option pool effectively becomes $25.5M for existing shareholders. Over 95% of term sheets specify the pool comes from pre-money.
No. All calculations happen entirely in your browser. No data is sent to any server, stored, or shared. Your financial information stays completely private.
