— Business & Valuation
Equity Dilution Calculator
Track how ownership dilutes through funding rounds and option-pool increases. Enter starting stake, round valuations, investment amounts, and pro-rata choices to see percentage ownership, value, dilution points, and cap-table evolution.
Ownership after dilution
36.34%
- Dilution (points lost)
- 63.66%
- Stake value
- $43,610,000
Try: Founder: seed → B, Single seed round, Investor 20%, pro-rata, Employee 2%
— Round-by-round dilution
| Round | Pre-own % | New investor % | Post-own % | Stake value |
|---|---|---|---|---|
| Seed | 100% | 20% | 70% | $7,000,000 |
| Series A | 70% | 25% | 49% | $19,600,000 |
| Series B | 49% | 20.83% | 36.34% | $43,610,000 |
— Cap-table evolution
| Round | You | Founders / others | Investors | Option pool |
|---|---|---|---|---|
| Now | 100% | 0% | 0% | 0% |
| Seed | 70% | 0% | 20% | 10% |
| Series A | 49% | 0% | 39% | 12% |
| Series B | 36.34% | 0% | 49.76% | 13.9% |
— A smaller slice of a bigger pie
Download— How it works
Single round: Post-round % = Pre-round % × (1 − new-investor % − new pool %), where new-investor % = investment ÷ post-money. Across rounds, apply that factor round after round. Stake value = ownership % × valuation.
How dilution works, round by round
When a company sells new shares to an investor, the total number of shares grows, so every existing holder owns a smaller fraction of the company even though their share count hasn’t changed. The maths is clean: after a round, your ownership equals your pre-round ownership times (1 minus the new investor’s percentage minus any new option pool percentage), where the new investor’s percentage is the investment divided by the post-money valuation. Apply that factor round after round and you have the whole journey. A founder starting at 100% who gives up 20% to a seed investor and creates a 10% pool keeps 70%; after a Series A on the same terms, 49%; after a Series B, the mid-30s. The slice shrinks every round — that’s normal and expected, not a failure.
Worked example — founder through three rounds (each round dilutes the prior stake): Seed: 100% × (1 − 20% − 10%) = 70%. Series A: 70% × (1 − 25% − 5%) = 49%. Series B: 49% × (1 − 20.8% − 5%) ≈ 36%. Ownership fell from 100% to 36% — but see what happened to the value.
The percentage falls, the value rises
Here is the point the dilution panic usually misses: the value of your stake is your percentage times the company’s valuation, and across a successful financing journey the valuation rises far faster than your percentage falls. In the example above, the founder’s 100% of a 6 million company (6 million) becomes 70% of a 10 million seed (7 million), then 49% of a 40 million Series A (about 20 million), then 36% of a 120 million Series B (over 40 million). The ownership dropped by nearly two-thirds while the stake’s value rose roughly seven-fold. A smaller slice of a much bigger pie is the whole game of venture financing — the dual-axis chart here plots both lines so the trade-off is unmistakable. Dilution only destroys value when the new money doesn’t buy enough growth, or in a down round where the valuation falls.
Option pools, pro-rata and down rounds
Two things make dilution worse than the headline investor percentage. Option-pool top-ups — new shares set aside for employees — dilute existing holders alongside the investor, and they recur most rounds, so they quietly add up. And down rounds, where a company raises at a lower valuation than before, dilute heavily and shrink the stake’s value at the same time. The main defence for an investor (rarely a founder) is pro-rata participation: investing your proportional share of each round to hold your percentage flat. This calculator shows what that costs and the percentage it preserves. Anti-dilution provisions (full ratchet, weighted average) offer further protection to preferred shareholders in down rounds but are not modelled here — they depend on the specific share terms. Educational tool only, not investment advice.
— Reader questions
How do you calculate equity dilution?
After a round, your ownership = pre-round ownership × (1 − new-investor % − new option-pool %), where the new investor’s % is the investment divided by the post-money valuation. For several rounds, apply that factor round after round. A 100% founder giving up 20% to an investor with a 10% pool keeps 100% × (1 − 0.20 − 0.10) = 70%.
Why does my ownership percentage go down when I raise money?
Because raising money means issuing new shares to the investor (and usually topping up the option pool). The total share count grows while your share count stays the same, so your fraction of the company shrinks. This is dilution — it’s a normal, expected part of financing, not a sign anything is wrong.
Can my stake be worth more even after dilution?
Almost always, in a successful company — that’s the point. Your stake’s value is your percentage times the valuation, and across rounds the valuation typically rises far faster than your percentage falls. Owning 36% of a 120 million company is worth far more than 100% of a 6 million one. Dilution only loses you value if the round doesn’t buy enough growth, or in a down round.
What is pro-rata participation?
It’s the right (and choice) to invest your proportional share of a new round so your ownership percentage stays flat instead of being diluted. Investors with pro-rata rights use it to maintain their stake in winners; founders rarely can, because the cheques get large. This calculator shows both the percentage pro-rata preserves and the total it would cost across the rounds.
How does an option pool affect dilution?
A new or expanded option pool issues shares for employees, which dilute existing holders just like a new investor does — and pools are usually topped up most rounds, so the effect compounds. In the formula, the pool percentage is subtracted alongside the investor percentage when computing your post-round ownership.
What is a down round and how does it affect dilution?
A down round is a financing at a lower valuation than the previous one. It dilutes heavily (more shares are sold per dollar at the lower price) and, unlike a normal round, it shrinks the value of your stake as well as your percentage. Anti-dilution provisions can protect preferred shareholders in down rounds, but they depend on the specific terms and aren’t modelled here.