Cap Table Dilution Calculator
Model how a funding round dilutes existing shareholders, including the effect of expanding the option pool before investment — the pool shuffle founders often miss.
📉 Equity📐 Post-money ownership = pre-round shares / (pre-round + new shares issued)💼 Business
Your current ownership (%)
Pre-money valuation
Investment amount
Option pool increase (% post-money)
Option pool created
Please enter valid values.
Formula & Reference
| Variable | Symbol | Formula | Units |
|---|---|---|---|
| Cap Table Dilution Calculator | — | Post-money ownership = pre-round shares / (pre-round + new shares issued) | percent |
Step-by-Step Examples
Example 1
Pre-Money Pool
25% ownership, 12M pre-money, 3M investment, 10% pool created pre-money.
- Post-money = 15M, investor takes 3/15 = 20%
- Pre-money pool means existing holders absorb it
- Remaining for existing = 100 − 20 − 10 = 70%
- Your stake = 25% × 0.70 = 17.50%
- Paper value 3.0M → 2.625M
✓ 17.50% — 30% relative dilution
Example 2
Post-Money Pool
Same round, pool created post-money instead.
- Investor takes 20%
- Your stake = 25% × 0.80 × 0.90 = 18.00%
- The investor shares the pool dilution
- Half a point better for you
✓ 18.00% — investor shares the pool
Example 3
No Pool
25% ownership, 12M pre, 3M investment, no pool change.
- Investor takes 20%
- Your stake = 25% × 0.80 = 20.00%
- Paper value 3.0M → 3.0M — unchanged
✓ 20.00% — dilution offset by valuation
Real-World Applications
Term Sheet Negotiation
Whether the option pool sits pre or post money is one of the most economically significant and least discussed terms.
Multi-Round Modelling
Running successive rounds shows cumulative founder dilution, which frequently surprises people.
Slice Versus Pie
Dilution reduces percentage while valuation increases may raise absolute value — both need looking at together.
Employee Communication
Explaining dilution honestly to option holders builds trust that vague reassurance does not.
Common Mistakes to Avoid
⚠️
Overlooking where the option pool sits
A pre-money pool is effectively a hidden price reduction — existing shareholders fund the entire pool while the investor's percentage is unaffected.
⚠️
Judging a round on percentage alone
Dilution to a smaller percentage of a much larger valuation can increase absolute value. Both dimensions matter.
⚠️
Ignoring liquidation preferences alongside dilution
Ownership percentage assumes proportional payout. Preferences change who gets paid first, which can matter far more than percentage in a modest exit.
Frequently Asked Questions
What is dilution? ▾
The reduction in existing shareholders' ownership percentage when a company issues new shares, typically in a funding round or option pool expansion.
What is the pre-money option pool shuffle? ▾
Creating or expanding the option pool before investment, so existing shareholders absorb all the pool dilution rather than sharing it with the new investor.
Is dilution always bad? ▾
Not necessarily. A smaller percentage of a substantially more valuable company can be worth more in absolute terms. The question is whether the valuation increase justifies it.
How much dilution is typical per round? ▾
Commonly 15 to 25% per priced round, plus any option pool expansion. Cumulative dilution across several rounds is often substantial for founders.
How do I model dilution across multiple rounds? ▾
Apply each round's dilution factor successively. Two rounds each taking 20% leaves 64% of the original stake, not 60%.