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View Premium Report →Founder dilution happens at each funding round when investors receive equity and an option pool is created. The formula is:
New Ownership % = Previous Ownership % × (1 - Investor Equity % - Option Pool %)
Each funding round dilutes founders by 15-25% investor equity plus 5-10% option pool. Typical founder ownership by stage:
Worked Example: Two Founders Raising Seed Round
Two founders (50/50 split) raise $2M seed at $8M pre-money. Investors get 20% ($2M / $10M post-money). Option pool expands by 10%. Total dilution: 30%.
Each founder's ownership after seed: 50% × (1 - 0.30) = 35%.
After Series A (another 25% dilution): 35% × (1 - 0.25) = 26.25% per founder. This aligns with the 30-45% post-Series A benchmark.
Use our dilution calculator to model your specific funding scenario.
Founders typically own 65-80% after pre-seed, 45-60% after seed, 30-45% after Series A, 20-35% after Series B, and 15-25% after Series C. Each funding round dilutes founders by 15-25% for investor equity plus 5-10% for option pool expansion. The dilution formula is: New Ownership = Previous Ownership × (1 - Investor Equity % - Option Pool %). Use a dilution calculator to model your specific scenario.
Pre-money valuation is the company's value BEFORE new investment. Post-money valuation is pre-money PLUS the new investment. Investor equity % = Investment / Post-Money Valuation. For example, if you raise $2M at $8M pre-money, post-money is $10M and investors get 20% ($2M / $10M). Your dilution depends on post-money, not pre-money — always negotiate pre-money to minimize dilution.
Option pools dilute founders, not early investors. When investors require a 10% option pool, that 10% comes from founders' ownership. For example, if founders own 80% and investors require a 10% pool, founders drop to 70% and investors still own 20%. The option pool is created from founder equity. Always negotiate pool size BEFORE the investment closes — investors will ask for more if you don't push back.
Typical dilution per round: Pre-seed 5-20%, Seed 20-35%, Series A 20-35%, Series B 13-25%, Series C+ 12-18%. The largest dilution events are Seed and Series A, where investors take 15-25% each round plus a 5-10% option pool. Minimize dilution by: (1) raising on favorable terms (higher pre-money), (2) negotiating a smaller option pool, (3) avoiding unnecessary rounds, and (4) raising only what you need.