Equity Dilution Calculator
Founder ownership through every funding round — including the option pool shuffle, the term-sheet clause that quietly turns an $8m pre-money round into a $7m one and appears nowhere as a number.
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Founder ownership through every round, and the term that does most of the damage: whether the option pool comes out of the pre-money. Almost every term sheet says it does, which means the founders pay for all of it and the incoming investor pays for none.
| Round | Raising | Pre-money | New pool % | Effective pre-money |
|---|---|---|---|---|
| Seed | $7,000,000 | |||
| Series A | $30,000,000 |
Cap table after each round
| Holder | After Seed | After Series A | Worth |
|---|---|---|---|
| Founders | 70.0% | 52.5% | $21,000,000 |
| Option pool | 10.0% | 12.5% | $5,000,000 |
| Seed | 20.0% | 15.0% | $6,000,000 |
| Series A | — | 20.0% | $8,000,000 |
With the pool taken pre-money, a $8,000,000 pre-money first round actually values the founders at $7,000,000. The difference is not written on the term sheet as a number — it appears only as a percentage in the pool line. Across all 2 rounds it comes to $3,000,000 of headline valuation the founders never received.
Two things this leaves out, both of which make real outcomes worse than the table above. Liquidation preferences mean investors are paid before common shareholders, so a founder's percentage is not their share of an exit. And this models priced rounds only — SAFEs and convertible notes convert at the next round and dilute you then, usually by more than expected, because the discount and cap are applied on top of everything here.
Every round is priced on what you have built since the last one. If you are building largely on your own, Tekk turns what you want into specs your coding agent can actually execute.
The calculation
post-money = pre-money + investment
investor share = investment ÷ post-money
everyone else ×= (1 − investor share − new pool)
The first two lines are uncontroversial and every tool gets them right. The third line is where the money is, and it depends on a word in the term sheet.
Worked example
Raising $2m on an $8m pre-money, with a 10% option pool.
| Pool pre-money | Pool post-money | |
|---|---|---|
| Post-money | $10,000,000 | $10,000,000 |
| Investor | 20.0% | 18.0% |
| Option pool | 10.0% | 10.0% |
| Founders | 70.0% | 72.0% |
| Effective pre-money | $7,000,000 | $7,200,000 |
Founders expect 80%. They sold 20%, after all. The pool takes another ten points, and in the left-hand column it takes all of them from the founders' side.
The option pool shuffle
This is the clause worth reading twice. Almost every term sheet requires the pool to be created pre-money, which means:
- The existing shareholders fund the entire pool.
- The incoming investor funds none of it, and still receives their full 20%.
- The "$8m pre-money" you agreed values you at $7m.
That $1m never appears on the term sheet as a number. It shows up as a percentage on the pool line, several paragraphs from the valuation, and it is a price adjustment wearing the costume of an administrative detail.
Taken post-money instead, the pool dilutes the investor too — they end at 18% rather than 20% — and the same pool costs founders $800,000 instead of $1m. The $200,000 difference is the entire substance of the argument about where the pool sits.
Post-money pools are rarely offered, for obvious reasons. Knowing the number is still worth something: in practice negotiating the pool smaller is more achievable than moving it post-money, and a concrete hiring plan is the argument that works.
Across rounds it compounds
Seed at $8m pre with a 10% pool, then a Series A of $8m at $32m pre with a 5% top-up:
| Holder | After seed | After Series A |
|---|---|---|
| Founders | 70.0% | 52.5% |
| Seed investor | 20.0% | 15.0% |
| Option pool | 10.0% | 12.5% |
| Series A | — | 20.0% |
Two rounds, and the founders are just above half. Note the seed investor is diluted by exactly the same 25% the founders are — dilution applies to everyone already on the cap table, which is why pro-rata rights get negotiated so hard.
Two things this does not model
SAFEs and convertible notes. This handles priced rounds only. Anything raised on a SAFE converts at the next round with a discount or cap applied on top of everything above, so if you have raised that way, treat these numbers as a floor rather than an estimate.
Liquidation preferences. Not dilution, and more consequential than dilution at most exits. Investors are usually paid before common shareholders, so a percentage of the company is not a percentage of the proceeds. A company that raised $80m and sells for $100m can leave very little for everyone else.
How it works
- 1
Enter each round
How much you raise, the headline pre-money, and how much new option pool the investor wants. Add rounds as you go — this equity dilution calculator carries the cap table forward, so each round dilutes everyone already on it, not just the founders.
- 2
Set where the pool comes from
Pre-money is what almost every term sheet asks for and means the existing shareholders fund the entire pool. Post-money splits it with the incoming investor. The toggle changes the outcome by more than most founders expect.
- 3
Read the effective pre-money
The column next to your headline valuation. It is what the existing holders were actually valued at once the pool is carved out, and the gap between the two is the part of the negotiation nobody writes down.
Frequently asked questions
- What is equity dilution?
- The reduction in your ownership percentage when a company issues new shares. Nobody takes anything from you — the denominator grows underneath you. Your slice becomes a smaller share of what should be a larger pie, and the whole bet is that the pie grows faster than the slice shrinks.
- How do you calculate dilution from a funding round?
- The investor's stake is their investment divided by the post-money valuation, where post-money is pre-money plus the investment. Raise $2m on an $8m pre-money and they own $2m / $10m = 20%, so everyone existing is scaled down by 80%. That is the arithmetic every equity dilution calculator performs.
- What is the option pool shuffle?
- The standard requirement that a new or expanded option pool be created out of the pre-money valuation rather than post-money. It means existing shareholders absorb all of it and the incoming investor absorbs none. On an $8m pre with $2m in and a 10% pool, founders end at 70% rather than the 80% they expect, and the effective pre-money is $7m.
- Why does a pre-money pool cost more than a post-money one?
- Because of who pays. Pre-money, the pool comes entirely out of the existing holders — $1m of an $8m headline valuation in the example above. Post-money, the new investor is diluted by it too, so the same pool costs founders $800,000 instead. The $200,000 difference is what you are negotiating over when you argue about pool placement.
- Is a post-money pool ever offered?
- Rarely, because it is straightforwardly worse for the investor — they end at 18% instead of 20% for the same cheque. It is worth asking for anyway, and worth knowing that the pre-money version is a price adjustment dressed as an administrative detail. Negotiating the pool size down is usually more achievable than moving it post-money.
- How much dilution is normal per round?
- Fifteen to twenty-five percent for a priced round, before any pool top-up. Run two or three rounds through a startup equity dilution calculator and total dilution lands somewhere around 40-60%, with founding teams commonly holding 10-25% at exit. Anything materially outside that band is worth understanding rather than accepting.
- How big should the option pool be?
- Sized to the hires you will actually make before the next round, which is usually 10–15% at seed and less thereafter. Investors have an incentive to ask for more than you need, since a pre-money pool is free to them and reduces the effective price they pay. A hiring plan is the strongest counter-argument.
- Does a cap table calculator account for SAFEs and convertible notes?
- This one does not, and it is the main gap. A cap table calculator that models priced rounds only will understate your dilution, because SAFEs and notes convert at the next round with a discount or valuation cap applied on top of everything shown here. If you have raised on SAFEs, treat these figures as a floor.
- What about liquidation preferences?
- They are not dilution and they matter enormously. Investors are typically paid before common shareholders in an exit, so a company that raised $80m and sells for $100m may pay preferred holders first and split $20m among everyone else. Your percentage is not your share of the proceeds.
- Do existing investors get diluted too?
- Yes, and it is why they negotiate pro-rata rights — the option to buy into later rounds to maintain their percentage. This equity dilution calculator dilutes every existing holder proportionally, including earlier investors and the pool itself, which is what actually happens absent those rights being exercised.
- Can I model a down round?
- Yes - enter a lower pre-money than the previous post-money and the arithmetic follows. A startup equity dilution calculator will show the heavier dilution but not the full picture: down rounds usually trigger anti-dilution provisions that issue additional shares to earlier investors, which this does not model and which makes the real outcome worse.
- Do you store the numbers I enter?
- No. The calculation runs entirely in your browser. Nothing is sent to a server, nothing is logged, and there is no account — worth knowing before you type real term-sheet figures into a web page.
- Why is this free, and what is Tekk?
- Tekk is a spec-driven development platform for people building software with AI coding agents. This calculator costs us nothing to run, and every round is priced on what you built since the last one. No signup, no run limit, no upsell inside the tool.
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