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Founder Dilution Calculator

The Founder Dilution Calculator estimates how a founder’s ownership percentage changes when a company issues new equity. It starts with the founder’s current stake, then applies the dilution from each financing round in sequence. The result shows the founder’s remaining ownership and the cumulative percentage-point loss.

This view is useful when comparing term-sheet scenarios, planning an option-pool increase, or explaining why dilution compounds across rounds. It focuses on percentage ownership rather than the dollar value of the stake, so it can be used before a final valuation is known. The estimate assumes the entered dilution percentages are measured on a post-transaction basis and that no secondary sale changes the founder’s share count.

Inputs

%
%
%
Result
—
Founder ownership after both rounds
After round 1—
Percentage points lost—
Relative ownership reduction—

1. Enter the current stake
Use the founder’s ownership immediately before the first modeled transaction.

2. Add first-round dilution
Enter the percentage of the post-round company allocated to new shares or investors.

3. Add second-round dilution
Enter zero when modeling only one round; otherwise enter the next post-round dilution percentage.

4. Review compounded dilution
The calculator applies each round sequentially, not as a simple sum.

5. Compare scenarios
Change either round to see how financing structure affects the remaining founder stake.

Remaining ownership = Current ownership × (1 − Round 1 dilution) × (1 − Round 2 dilution)

Where:

  • Current ownership = founder stake before the modeled rounds, as a percentage
  • Round dilution = newly issued post-transaction ownership, entered as a decimal in the calculation

Assumptions: Each round dilutes all pre-existing holders proportionally. Secondary share sales, anti-dilution protections, and changes in fully diluted share definitions are not included.

What the result means

Founder ownership after both rounds.

Use the result as a planning estimate based on the assumptions above.

Given: A founder owns 72% before a Series A that creates 18% dilution, followed by a Series B that creates 12% dilution.

Calculation: After Series A: 72% × (1 − 0.18) = 59.04%. After Series B: 59.04% × (1 − 0.12) = 51.9552%.

Result: The founder retains about 51.96%. The two rounds reduce the original stake by 20.04 percentage points.

Why can’t I add the two dilution rates?

Each round applies to the ownership remaining after the prior round. Sequential multiplication captures that compounding effect.

Should an option-pool increase be entered as dilution?

Yes, when the increase creates new fully diluted shares. Enter its effective post-transaction percentage as part of the relevant round.

What does a 20% relative reduction mean?

It means the founder lost one-fifth of the starting ownership, not necessarily 20 percentage points.

Does this model secondary sales?

No. A secondary sale transfers existing shares and may reduce one holder’s stake without diluting every shareholder.

How is this different from an ownership calculator?

This tool emphasizes percentage loss across rounds; an ownership calculator usually starts from share counts or a single cap-table event.