How to model a cap table and dilution
- List your current shareholders and the number of shares each holds: founders, early employees, angels and any existing option pool.
- Enter the new round: pre-money valuation, the amount being invested and the size of the option pool investors want after the round.
- Choose whether the option pool is created before the round (the usual term sheet demand) or after it.
- The table and chart show everyone's ownership before and after, the price per share and the post-money valuation.
How dilution works
When a company raises money, it issues new shares to investors, so existing shareholders own a smaller percentage of a bigger company. The investor's stake is the investment divided by the post-money valuation, where post-money = pre-money + investment: 1,000,000 into a 4,000,000 pre-money valuation buys 20%. Founders who held 90% together before the round would then hold 72% if nothing else changed.
The option pool matters as much as the valuation. Investors usually ask for a pool of 10–15% for future hires, created before their money comes in, so the pool's dilution falls entirely on existing shareholders; this "option pool shuffle" effectively lowers the price per share. Switching the setting shows the difference. This calculator models a simple priced round with ordinary shares. Convertible notes, SAFEs, liquidation preferences and vesting all change real outcomes, so have a lawyer review any term sheet. Your numbers are saved only in this browser.
How much equity do founders give up in a seed round?
Typically 15–25% to investors, plus an option pool of around 10%.
What is the difference between pre-money and post-money valuation?
Pre-money is the company's value before the investment; post-money is pre-money plus the new money.
Does dilution mean my shares are worth less?
Not necessarily. You own a smaller percentage, but of a company with more cash and, if the round is priced higher than before, more value.