Dilution across rounds
Put in how many shares the founders hold, then add each investment round. You see who owns what percentage after every one of them.
Skip to the calculatorDilution
Dilution is what happens to your percentage when the company issues new shares. Your share count does not change. The denominator does. You still hold every share you held yesterday; there are simply more shares in existence today.
Founders routinely confuse the price they negotiated with the ownership they end up with. The two are connected by a single line of arithmetic, and once you can run it yourself, a term sheet stops being a document you have to take on trust.
Worked example
You hold 10,000,000 shares and raise €2m at an €8m pre-money valuation, with no option pool created in the round. The price per share is €8m divided by 10,000,000, or €0.80. The €2m buys 2,500,000 new shares, taking the total to 12,500,000. The investor holds 2,500,000 of 12,500,000, which is 20%, the same answer as €2m divided by the €10m post-money valuation. You still hold 10,000,000 shares, but now that is 80%. Put a pool in the round and this price falls: a 10% pool created before the money takes it to €0.70, because the shares reserved for the pool come out of your side before the investor's percentage is worked out.
How to calculate equity dilution across funding rounds
Founders keep
64.0%Round 1
As a share of the company after the round.
Convertibles converting into this round
Share of the round funded by existing holders exercising pro-rata rights.
Round 2
As a share of the company after the round.
Convertibles converting into this round
Share of the round funded by existing holders exercising pro-rata rights.
Ownership over time
- Founders64.0%
- Seed16.0%
- Series A20.0%
Cap table: Series A
| Holder | Shares | Ownership | Value |
|---|---|---|---|
| Founders | 10,000,000 | 64.0% | €16,000,000 |
| Seed | 2,500,000 | 16.0% | €4,000,000 |
| Series A | 3,125,000 | 20.0% | €5,000,000 |
| Total | 15,625,000 | 100.0% | €25,000,000 |
Founders
- Ownership
- 64.0%
- Shares
- 10,000,000
- Value
- €16,000,000
Seed
- Ownership
- 16.0%
- Shares
- 2,500,000
- Value
- €4,000,000
Series A
- Ownership
- 20.0%
- Shares
- 3,125,000
- Value
- €5,000,000
Total
- Ownership
- 100.0%
- Shares
- 15,625,000
- Value
- €25,000,000
How this is calculated
- Price per share = pre-money valuation ÷ shares outstanding before the round, WHEN no option pool is created in the round.
- New shares issued = amount raised ÷ price per share.
- The investor's ownership = new shares ÷ total shares after, which always equals amount raised ÷ post-money valuation.
- Existing holders keep every share they had. Their percentage falls because the total grew.
- Pro-rata participation changes who buys the new shares, not how many are issued, so total dilution is unchanged.
- A pool created BEFORE the money comes out of the founders alone, so the investor pays less per share than the headline implies: on €2m at an €8m pre-money with a 10% pool, €0.70 rather than €0.80. A pool created AFTER the money dilutes everyone including the investor. Set the pool to zero and neither applies.
What this model leaves out
- Every euro here is primary: it buys newly issued shares and goes to the company. An investor buying shares from a founder instead moves ownership without changing the total, and that is not modelled.
- One share class at one price per round. Real rounds can carry several.
- Post-money is pre-money plus the amount raised, with no fees or discounts taken out.
- Convertibles already outstanding do not convert here. Model those on the convertibles page first, then bring the resulting share count back.
Common questions
- What is equity dilution?
- Dilution is the fall in your ownership percentage when a company issues new shares. It is worth being precise about what changes: your share count does not move, the total number of shares in existence does. If you hold 10,000,000 shares out of 10,000,000 you own 100%, and after the company issues 2,500,000 new shares to an investor you still hold 10,000,000, but now out of 12,500,000, which is 80%. Nothing was taken from you. The denominator grew.
- Does dilution mean I lose shares?
- No. This is the single most common misreading of a cap table. You keep every share you held before the round, and the certificate does not change. What changes is what each share represents, because there are now more of them. The reason founders accept it is that a smaller slice of a company holding new money is usually worth more than a larger slice of one without it, and the calculator above lets you check whether that is true for the round in front of you rather than assuming it.
- How much equity do founders give up in a seed round?
- In Europe and the UK a priced seed round commonly places 15% to 25% with the new investor, and a round that also creates or tops up an option pool takes more than the headline suggests. Bittern deliberately does not publish a benchmark table here, because a number without a source is worse than no number. What the tool does instead is let you enter the terms you have actually been offered and see the result. If someone quotes you a percentage, the useful question is what pool and what convertibles are inside it.
- What is the difference between pre-money and post-money valuation?
- Pre-money is what the company is agreed to be worth before the new money arrives. Post-money is that figure plus the amount raised. On a EUR 2m round at an EUR 8m pre-money, the post-money is EUR 10m and the investor ends up with 2m divided by 10m, which is 20%. The distinction matters because the same headline number means different ownership depending on which one it refers to, and a term sheet does not always say. Ask which it is before you model anything.
- How does an option pool change my dilution?
- A great deal, and usually in the direction nobody mentions. A pool created before the money comes out of the existing holders alone, so the founders absorb it and the investor does not. On EUR 2m at an EUR 8m pre-money with no pool, the price is EUR 0.80 a share. Put a 10% pool in the round ahead of the money and the price falls to EUR 0.70, because the shares reserved for future hires are counted before the investor's percentage is worked out. A pool created after the money dilutes everyone including the investor. Set the pool timing on the tool above and watch the founder figure move.
- What are pro rata rights and do they change how much I am diluted?
- A pro rata right lets an existing investor buy enough of the new round to hold their percentage steady. It changes who buys the new shares, never how many are issued, so the total dilution of the round is identical either way. What moves is the distribution: if an existing holder takes half the round, the founders are diluted by the same amount overall while that holder gives up less of their own position. The slider on the dilution tool is the one control whose effect is invisible in the total share count by design.
Terms on this page
- Fully diluted shares The share count that assumes every option and every convertible has already converted. The only number worth quoting.