Cap Table Dilution Calculator
Each round dilutes existing holders by issuing new shares. The dilution math is mechanical; the negotiation is over the order of operations and what counts in the pre-money cap.
How dilution works mechanically
When new shares are issued, every existing share represents a smaller fraction of the company. The math is: new ownership = old ownership × (pre-money / post-money). A $2M check at $8M pre-money becomes $10M post-money; existing holders are diluted by 20% (8/10).
The option pool shuffle
Investors typically require an unallocated option pool sized 10-15% of the post-money cap, and require it to be created from the pre-money. This means existing holders pay for the dilution, not the new investor. A 10% post-money pool top-up dilutes founders by approximately 10% before the money lands, then they're diluted again by the round itself.
Worked example
Founders own 100% of 8,000,000 shares. They raise $2M at $8M pre-money with a 10% post-money option pool top-up. The pool comes from pre-money: post-pool, post-investment shares are sized so the pool is exactly 10% of the new total. Founders end up at roughly 70%, the pool sits at 10%, and the new investor takes 20%. A subsequent $6M round at $20M pre-money with another 5% pool top-up dilutes founders to roughly 49.4%.
Anti-dilution and other modifiers
Standard preferred equity often includes weighted-average anti-dilution protection: if a later round is at a lower price, the conversion ratio of earlier preferred adjusts to compensate, increasing dilution to common shareholders (typically founders). Liquidation preferences (1× non-participating is most common) don't affect cap table percentages but redirect proceeds in an exit. SAFEs and notes that haven't converted yet don't appear in pre-money percentages but materially affect post-conversion ownership.
What this calculator doesn't model
- Convertible securities. Outstanding SAFEs and notes convert at the priced round, often at discount and cap, increasing dilution beyond the explicit round terms. Use the SAFE conversion calculator for this.
- Refresh grants and pool exhaustion. Pools are often exhausted between rounds and refreshed; this model assumes a single pool top-up at each round.
- Secondary sales. Founders selling shares directly doesn't dilute, but changes the cap table.
- Liquidation preference and waterfall. Cap table percentages tell you ownership; they don't tell you what each share earns in a $X exit.