Startup Dilution Calculator: What a Funding Round Does to Your Stake
Not financial advice: this article is for general information only and is not an offer to buy or sell any security. Do your own due diligence before investing. Disclaimer
Funding round dilution calculator
Assumes a priced equity round where the new option pool is counted in the pre-money valuation (the usual term-sheet ask), no convertible notes or SAFEs converting, and no other investors. Figures are arithmetic, not legal or tax advice.
Enter the round terms above. The calculator works in any currency and updates as you type.
Worked example
| Amount | Stake after the round | |
|---|---|---|
| Pre-money valuation | 4,000,000 | |
| Investment | 1,000,000 | 20.0% |
| Post-money valuation | 5,000,000 | |
| New option pool (in the pre-money) | 500,000 of value | 10.0% |
| Founders (100% before the round) | 70.0% | |
| Effective pre-money for founders | 3,500,000 |
With 10,000,000 existing shares the price per share is 0.35: the investor receives 2,857,143 new shares, the pool 1,428,571, for 14,285,714 shares after the round (0.35 × 14,285,714 = the 5,000,000 post-money).
The formulas
- Post-money = pre-money + investment.
- Investor stake = investment ÷ post-money.
- Existing holders after the round = 1 − investor stake − new pool (when the pool is counted in the pre-money).
- Founders after = founders’ share before × existing holders after.
- Effective pre-money = pre-money − pool % × post-money: the part of the headline valuation existing holders actually keep.
- Price per share = investment ÷ new investor shares, where total shares after = existing shares ÷ existing holders’ stake after.
Why the option pool matters
Investors usually ask for the new employee option pool to be created before their money comes in, so the pool is carved out of the pre-money and dilutes only the founders and earlier holders. In the example, founders would keep 80% without the pool and 70% with it, even though the headline pre-money is the same. Negotiating a smaller pool, sized to real hiring plans, is often worth more than a higher headline valuation.
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The calculator covers a single priced round. Convertible notes, SAFEs, liquidation preferences and anti-dilution terms change the result and need the actual documents and professional advice.
P.S. A few readers have asked which equity crowdfunding we actually reach for — it's Republic; if you want the current details.
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