Equity Dilution Simulator
Model how priced funding rounds change founder ownership, share counts, post money valuation, and cumulative dilution.
How it works
Enter the founder share count and add priced rounds in chronological order. For each round, enter a name, new investment, and pre money valuation. Use the same currency for all round amounts.
The pre money valuation and existing share count determine the round price per share. Dividing the investment by that price gives new investor shares. Those shares carry into the next round.
Review the share counts, founder ownership, post money valuation, and cumulative dilution at each stage. The founding row shows the initial share count before outside investment.
Use the output to compare share count scenarios. It does not model employee option pools, SAFEs, notes, pro rata rights, liquidation preferences, or control terms.
Step by step
- Enter founder shares and a round name
- Enter investment and pre money valuation
- Review ownership and dilution by stage
Worked example
Start with 10,000,000 founder shares. In a Seed round, invest $500,000 at a $2,000,000 pre money valuation. The price is $0.20 per share, so the investor receives 2,500,000 shares and the founder owns 80% after the round.
Next, invest $2,000,000 at an $8,000,000 pre money valuation. The existing 12,500,000 shares set a $0.64 price. The investor receives 3,125,000 shares. After Series A, the founder has 10,000,000 of 15,625,000 shares, or 64%, for 36% cumulative dilution.
When to use this simulator
Use this simulator to compare founder ownership across sequential priced funding rounds with stated pre money valuations and investment amounts.
Use a cap table and legal review for option pools, SAFEs, notes, pro rata rights, preferences, and other financing terms.
Common mistakes
Enter each round in chronological order and use one currency consistently. The pre money valuation applies before that round’s investment. Do not enter post money valuation in the pre money field.
A blank round is ignored only when both amount fields are zero. If one amount is entered, both investment and pre money valuation must be greater than zero.
Formula
Price per share = Pre money valuation / Existing shares
New shares = Investment / Price per share
Post money valuation = Pre money valuation + Investment
Founder ownership % = Founder shares / Total post round shares × 100
Cumulative dilution % = 100% − Founder ownership %
Each round uses the total shares from the previous stage. Investor shares carry forward. A row with both investment and pre money set to zero is unused; a partially entered round is invalid. The model permits fractional shares and displays share counts rounded to two decimals. It does not model option pools, SAFEs, convertible notes, pro rata participation, liquidation preferences, or anti dilution terms.
Limitations and assumptions
This calculator models straightforward priced share rounds only. It assumes each new investment buys shares at the price implied by the entered pre money valuation and existing share count. It allows fractional shares in the calculation and rounds displayed share counts to two decimals. It excludes employee option pools, SAFEs, convertible notes, pro rata participation, liquidation preferences, anti dilution provisions, taxes, legal terms, and voting control. Use the same currency for all investment and valuation inputs. The result is a scenario estimate, not a financing offer or advice.
Key terms
- Pre money valuation
- The valuation before a new investment. It is divided by existing shares to calculate the round price per share.
- New investor shares
- The number of new shares purchased by the investment at the round price per share.
- Cumulative dilution
- The reduction in founder ownership percentage from the initial 100% after the modeled rounds.
Compare related questions
Use the Employee Stock Option Value Calculator for employee awards. This simulator focuses on priced financing rounds and founder ownership.
A priced round uses the entered pre money valuation and new investment to calculate a share price and the shares issued. The model does not convert SAFEs or notes.
FAQ
How does the simulator calculate shares in a round?
For a priced round, the model divides pre money valuation by existing shares to get price per share, then divides the investment by that price to find new shares. With 10,000,000 existing shares, a $2,000,000 pre money valuation, and a $500,000 investment, price is $0.20 and 2,500,000 new shares are issued.
What is post money valuation?
Post money valuation is the entered pre money valuation plus the new investment. It is a valuation figure. Ownership percentages are calculated from the share counts before and after issuing new shares.
How is cumulative dilution calculated?
Cumulative founder dilution is 100% minus the founder ownership percentage after the latest modeled round. Each round carries forward investor shares from earlier rounds and adds shares for the new investment.
Does a higher valuation always mean a better financing deal?
The model shows the ownership effect of the priced rounds you enter. It does not identify a lower dilution strategy or tell you which valuation, amount, or terms to negotiate.
How many rounds can I model?
You can model any number of rounds in chronological order. Each active round needs a positive investment, a positive pre money valuation, and a name. A row with both amounts at zero is treated as unused.
Related tools
Use the Employee Stock Option Value Calculator to model employee option value as a separate question. The QSBS Exclusion Calculator covers a separate US tax topic. Neither tool feeds inputs into this ownership model.