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Equity Dilution Calculator

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Enter your pre-money valuation, investment amount, and current ownership to calculate post-money valuation and dilution.

Equity Dilution Calculator

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Post-money valuation$10,000,000.00
New investor ownership20.0%
Dilution factor80.0%
Your ownership after this round56.0%
Assumes a simple priced round with no option pool expansion or convertible note conversion, both of which add further dilution not captured here.

The formula

Post-money valuation = Pre-money valuation + New investment New investor ownership = New investment / Post-money valuation Dilution factor = 100% - New investor ownership % Your ownership after = Your ownership before x Dilution factor
Example

$8,000,000 pre-money valuation, $2,000,000 new investment: post-money valuation of $10,000,000, new investors get 20% ownership. A founder who owned 70% before the round now owns 56.0% - diluted proportionally, but still growing the underlying value of their smaller slice.

Step-by-step guide

  1. Get the pre-money valuation and investment amount from the term sheet - these two numbers determine everything else in a simple priced round.
  2. Enter your current ownership percentage before this specific round closes.
  3. Read your post-round ownership - and remember that everyone's percentage stake shrinks proportionally, but ideally the pie itself is growing faster than your slice shrinks.

Why "smaller percentage of a bigger company" is usually the goal, not a loss

Dilution often sounds purely negative, but the more useful framing is comparing the DOLLAR VALUE of your stake before and after, not just the percentage. A founder owning 70% of an $8,000,000 company holds a stake worth $5,600,000 on paper. After diluting to 56% of a $10,000,000 company, that same stake is worth $5,600,000 too - unchanged in this specific example, since the round happened at a price reflecting the company's existing value. The real win from raising capital comes from what that new money helps the company achieve going forward: if the investment helps the company grow to be worth significantly more later, a smaller percentage of a much larger number can end up being worth far more than a larger percentage of a company that stayed small.

Common mistakes

Forgetting option pool expansion - many term sheets require expanding the employee option pool BEFORE the new money comes in, which dilutes existing shareholders (including founders) more than the simple math above suggests.
Not accounting for convertible notes or SAFEs converting in the same round - these instruments from earlier fundraising typically convert into equity at this point too, adding additional dilution beyond just the new round's investor.

Frequently asked questions

What's the difference between pre-money and post-money valuation?

Pre-money is the company's agreed value BEFORE the new investment is added. Post-money is pre-money plus the new investment - the total value immediately after the round closes, which determines the new investor's percentage stake.

Does everyone get diluted by the same percentage?

In a simple round, yes - all existing shareholders are diluted proportionally to their existing ownership. More complex rounds with special terms (like anti-dilution protection for earlier investors) can shift how dilution is distributed among different shareholder classes.

What is "anti-dilution protection" and who typically gets it?

It's a contractual term (common in preferred stock held by earlier investors) that adjusts their conversion ratio if a later round happens at a lower valuation ("down round"), protecting them from some of the dilution that common shareholders and founders would otherwise absorb.

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