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Startup Equity Dilution Calculator

Model how a priced funding round changes your cap table. List the current shareholders and their shares, enter the investment and pre-money valuation, and set the option pool target. The calculator issues the new pool and investor shares, then shows each holder's ownership before and after and how much they were diluted.

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Unallocated pool as % of post-round fully diluted shares. 0 = no top-up.

Enter your values to see the result.
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How to use the Startup Equity Dilution Calculator

  1. List current shareholders, one per line as "Name, shares". Include granted options if you track fully diluted ownership.
  2. Enter any existing unallocated option pool shares.
  3. Enter the investment and pre-money valuation of the new round.
  4. Set the option pool target as a % of the post-round cap table and choose whether it is created in the pre-money or the post-money.
  5. Read the cap table: new shares, price per share and each holder's ownership and dilution.

How a priced round dilutes the cap table

In a priced round the company issues new shares to the investor, and usually tops up the employee option pool at the same time. Existing holders keep the same number of shares but own a smaller percentage of a bigger company.

  • Investor ownership i = Investment ÷ (Pre-money + Investment)
  • New pool shares (pool in pre-money) = (p × S − E × (1 − i)) ÷ (1 − i − p), where S = existing fully diluted shares, E = existing unallocated pool, p = pool target
  • Price per share = Pre-money ÷ (S + new pool shares)
  • Investor shares = Investment ÷ Price per share
  • Dilution of each existing holder = 1 − S ÷ Total shares after

Example: 10,000,000 shares (9,000,000 held + 1,000,000 unallocated pool), $2M at $8M pre-money and a 10% pool target. The investor gets 20%. New pool = (0.1 × 10,000,000 − 1,000,000 × 0.8) ÷ 0.7 = 285,714 shares. Price = $8,000,000 ÷ 10,285,714 = $0.7778, so the investor receives 2,571,429 shares. The post-round total is 12,857,143 shares and every existing holder is diluted by 22.2%: Founder A goes from 40% to 31.1%.

Pool in the pre-money vs post-money

Pool in pre-moneyPool in post-money
Who bears the new poolExisting holders onlyEveryone, including the new investor
Investor ownershipExactly investment ÷ post-moneySlightly below investment ÷ post-money
Price per shareLower (more pre-money shares)Pre-money ÷ existing shares
How commonTypical in venture term sheetsLess common, founder-friendly

Dilution over several rounds

Dilution compounds. A founder with 40% who is diluted 22% at seed, 20% at Series A and 15% at Series B keeps 40% × 0.78 × 0.80 × 0.85 ≈ 21.2%. Run the calculator once per round, feeding the "shares after" column into the next round's holder list.

Frequently asked questions

How is dilution calculated?

When new shares are issued, every existing holder's percentage falls in proportion. Relative dilution = 1 − (ownership after ÷ ownership before), which equals 1 − (shares before ÷ total shares after). A founder going from 40% to 31.1% has been diluted by about 22%.

What is the option pool shuffle?

Investors often require the employee option pool to be enlarged before their money comes in, with the new pool counted inside the pre-money valuation. The extra pool shares lower the price per share, so the cost of the pool falls entirely on existing holders and not on the new investor. This is why the effective pre-money valuation is lower than the headline number.

How are the new pool shares calculated?

With the pool in the pre-money: new pool shares = (target % × existing shares − existing pool × (1 − investor %)) ÷ (1 − investor % − target %). This makes the total pool exactly the target percentage of the post-round fully diluted shares while the investor still gets investment ÷ post-money.

What is the price per share in a priced round?

Price per share = pre-money valuation ÷ fully diluted pre-money shares, including any new pool shares created before the round. New investor shares = investment ÷ price per share.

Should I include granted options in the share list?

For fully diluted ownership, yes: include issued shares, granted (vested and unvested) options, warrants and converted SAFEs or notes. Enter the unallocated part of the option pool separately so the calculator can top it up correctly.

Does this handle SAFEs, notes or liquidation preferences?

Not directly. Convert SAFEs and notes to shares first and add them as holders. Liquidation preferences affect payouts in an exit, not the ownership percentages shown here.

Are all the tools on FreeToolCabin tested for quality and accuracy?

Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.

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