Equity Dilution Calculator

This calculator shows what happens to your share of a company when it issues new shares to investors and sets aside shares for an employee option pool. It gives your ownership before and after the pool, the percentage points lost, the post-money valuation and the paper value of your stake.

Founders use it to compare term sheets and plan how many rounds they can raise before losing control. Employees and early hires use it to understand what an equity grant may become after future fundraising. Dilution is not automatically bad: a smaller share of a more valuable company can be worth more, which the stake-value output makes visible.

The model covers a straightforward priced equity round. It does not handle SAFEs or convertible notes converting at a cap or discount, liquidation preferences, or anti-dilution adjustments, all of which can change what each holder actually receives. For anything you are about to sign, have a startup lawyer review the cap table.

Investors buy raise ÷ post-money of the company, and every existing holder shrinks by the same factor. This calculator then applies the pool after the round, diluting everyone, investors included. In most US venture term sheets the pool is instead included in the pre-money valuation (the "option pool shuffle"), so only existing holders absorb it. In the default example that gives 10.5% rather than 10.8%: treat the result as a slightly optimistic estimate when the pool is pre-money.

Dilution compounds: each round multiplies your stake by (1 − share sold). Selling 20% in each of three rounds leaves you with 0.8 × 0.8 × 0.8 = 51.2% of your starting percentage. Adding a 10% pool at each round leaves about 37%.

To estimate a stock option or startup equity grant:

• Ownership = your shares ÷ the company's fully diluted shares outstanding. Ask for both numbers; a share count alone means nothing.
• Paper value = your shares × (current price per share − your exercise price). Use the 409A fair market value of common stock for a conservative figure, not the preferred price from the latest round.
• Future dilution: run this calculator once per expected round to see what your percentage may become.
• Taxes depend on whether you hold ISOs or NSOs and when you exercise and sell. The capital gains tax calculator gives a rough idea of tax on a sale; get advice before exercising.

Private-company equity is illiquid and can be worth nothing, so treat paper value as a scenario, not savings.

Pre-money is what the company is valued at before the investment; post-money adds the new cash. Investor ownership is raise ÷ post-money: $2M into an $8M pre-money company buys 20%, not 25%.

When a term sheet quotes a post-money valuation, subtract the raise to get pre-money before entering it. For how valuations are reached in the first place, see the business valuation calculator; to compare the annual growth in valuation between two rounds, use the CAGR calculator.