Published 2026-01-16 · Last updated 2026-03-04 · Reviewed by Valzura Editorial Team
Dilution Calculator
See exactly how much of your company you give up when you raise.
Equity dilution is the reduction in existing shareholders' ownership percentage when a company issues new shares, typically in a funding round. After a round, post-money valuation equals pre-money valuation plus the new investment, and the investor's ownership equals their investment divided by the post-money valuation. If a new option pool is created, it is usually carved out of the pre-money value, so founders and earlier investors absorb that dilution as well.
Agreed value of the company before the round.
Amount the new investor is putting in.
Pool carved out of pre-money, borne by existing holders.
Enter a pre-money valuation and investment to model dilution.
The dilution math behind a round
Investor ownership = Investment / Post-money
When a company raises a priced round, it issues new shares, and every existing shareholder's percentage shrinks even though their share count stays the same. The investor's stake is always measured against the post-money valuation, not the pre-money. A one million dollar investment at a four million dollar pre-money gives the investor 20 percent, and existing holders are diluted by the same 20 percent.
Why the option pool bites founders
Investors typically require an employee option pool to be created before the round closes, carved out of the pre-money valuation. Because it comes from the pre-money side, existing shareholders, mainly founders, absorb that dilution rather than the incoming investor. A larger requested pool therefore increases founder dilution beyond the investor's headline stake. The calculator above lets you add a pool to see its true cost.
Dilution compounds across rounds
Founders commonly give up 10 to 25 percent per priced round, and those rounds stack. After a seed and a Series A, a founding team can drop well below half ownership. The single best defense is raising against a credible, well-supported valuation, so you sell as little of the company as possible for the capital you need. Knowing what your business is worth today is where that starts, whether through the frameworks in our business valuation guide or a quick estimate from the free valuation calculator.
Frequently Asked Questions
How is dilution calculated in a funding round?
Investor ownership equals the investment divided by the post-money valuation, where post-money equals pre-money plus the investment. For example, a 1 million dollar investment at a 4 million dollar pre-money means a 5 million dollar post-money and 20 percent for the investor, diluting existing holders by 20 percent.
How does an option pool affect dilution?
Option pools are typically created before the round closes and carved out of the pre-money valuation. That means existing shareholders, mainly founders, absorb the pool's dilution rather than the new investor. A larger requested pool therefore increases founder dilution beyond the investor's stake alone.
What is the difference between pre-money and post-money valuation?
Pre-money valuation is the company's agreed value before the new investment. Post-money valuation is that figure plus the amount invested. The investor's ownership percentage is always measured against the post-money valuation, not the pre-money.
How much dilution is normal per round?
Founders commonly give up 10 to 25 percent per priced round, with seed and Series A rounds often landing around 20 percent. Multiple rounds compound, so tracking cumulative dilution across seed, Series A, and beyond matters more than any single round.
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