Startup Dilution Calculator Widget

Show founders what a term sheet really does to their stake. Pre-money valuation, investment, current founder and option-pool percentages and the investor's required post-money pool give post-money valuation, the investor's share, founders' ownership after the round, the effective pre-money and a before-and-after cap table.

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How it works

Post-money valuation is pre-money plus the new money, and the investor owns investment / post-money. Investors usually also require an option pool of a stated size after the round - but created before it, inside the pre-money. That is the option pool shuffle: the new options dilute only the existing holders. If all pre-round shares end with 1 - investor% of the company and the pool must be T% of it, the shares that existed before the round end with x = (1 - investor% - T) / (1 - existing pool%), and founders own their current fraction times x. In the Venture Hacks example, 8 million pre-money, 2 million invested and a 20% post-money pool created from nothing leave founders 60%, not 80%, and the effective pre-money - the value the existing shares really receive - is 6 million. If the existing pool is already larger than required, no top-up is created and everyone is diluted only by the investor. The cap table compares all holders before and after, on a fully diluted basis.

Calculation method

  • Post-money = pre-money + investment; investor % = investment / post-money
  • Pre-existing shares after the round: x = (1 - investor % - target pool %) / (1 - existing pool %)
  • If x > 1 - investor %, no new options: x = 1 - investor %
  • Founders after = founders now x x; other holders after = others now x x; pool after = target pool %
  • Effective pre-money = x x post-money (headline pre-money minus the value of new options)

Worked examples

Venture Hacks example

Inputs: Pre-money 8,000,000; investment 2,000,000; founders 100%; no existing pool; 20% post-money pool

Result: Post-money 10,000,000; investor 20%; founders 60%; effective pre-money 6,000,000

The 2 million of new options is effectively paid for by the founders.

With an existing pool

Inputs: Pre-money 8,000,000; investment 2,000,000; founders 80%; existing pool 10%; 20% target pool

Result: Founders 53.33%; other holders 6.67%; pool 20%; investor 20%; effective pre-money 6,666,667

x = (1 - 0.2 - 0.2) / (1 - 0.1) = 2/3 of the company stays with the pre-existing shares.

An illustration only, not legal, tax or investment advice; have a lawyer review the actual term sheet and cap table.

Limitations

  • One priced round; SAFEs, convertible notes, warrants and liquidation preferences are not modelled.
  • Percentages only - share counts and price per share depend on the company's actual cap table.
  • Assumes the pool target is stated as a percentage of the post-money fully diluted capitalisation.

Where publishers use it

  • Startup-law and fundraising explainer articles on term sheets
  • Accelerator demo-day preparation material
  • Founder communities comparing seed and Series A offers
  • Equity-management and cap-table software blogs
  • Entrepreneurship classes on venture financing

Questions

What is the option pool shuffle?

Investors ask for the new option pool to be counted in the pre-money valuation, so it is created before they invest and dilutes only the founders and existing holders. In Venture Hacks' example an 8 million headline pre-money with a 20% pool is really a 6 million valuation of the existing company.

Why does a bigger pool lower the effective pre-money?

Each extra point of post-money pool comes entirely out of the existing holders. With 8 million pre and 2 million in, a 10% pool gives founders 70% and an effective pre-money of 7 million; a 20% pool gives 60% and 6 million.

How large should the option pool be?

Size it to the hiring plan until the next round, often 10-15% at seed and Series A. A larger pool than you need costs founders ownership now; unused options usually stay in the pool for later.

Does this handle SAFEs or convertible notes?

No. SAFEs and notes convert at the round and dilute existing holders too; their conversion depends on caps and discounts. Convert them into a percentage first and treat it as part of the other existing holders.

Is fully diluted the right basis?

Yes for negotiating: investors price rounds on the fully diluted share count, including all granted and ungranted options. Enter founder and pool percentages on that basis.

Sources

  1. The Option Pool Shuffle - Venture Hacks . Explains how a post-money pool placed in the pre-money lowers the effective valuation: 8M pre with a 20% pool and 2M invested is an effective 6M pre-money. Checked 2026-10-01.

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