toolbox
Home / Startups & Digital Business / SaaS Dilution Calculator

SaaS Dilution Calculator

The SaaS Dilution Calculator estimates how a new equity financing and option-pool increase reduce an existing holder’s ownership percentage. It starts with the holder’s current ownership, adds a pre-financing option pool adjustment, and then applies dilution from the investor’s post-money ownership.

The result helps founders, employees, and existing investors compare financing scenarios before a cap table is finalized. It separates dilution caused by the option pool from dilution caused by the investment, making the source of the change easier to understand. The calculation is intentionally simplified and does not model convertible securities, anti-dilution provisions, secondary sales, or differences among share classes.

Dilution scenario

%
USD
USD
%
Result
—
Ownership after financing
New investor ownership—
Ownership after pool adjustment—
Ownership decrease—
Relative dilution—

1. Enter current ownership
Use the holder’s percentage immediately before the modeled pool adjustment and financing.

2. Enter pre-money valuation
Provide the negotiated company value before the new capital.

3. Enter the investment amount
Use the amount of newly issued primary equity.

4. Add option-pool dilution
Enter the incremental dilution attributable to a pool increase made before the financing.

5. Review both ownership and dilution
Percentage points show the absolute decrease; relative dilution shows the decrease compared with the starting stake.

6. Test alternative terms
Compare different investment sizes, valuations, and pool requirements to see which term drives the most dilution.

Investor ownership = Investment ÷ (Pre-money valuation + Investment)
Ownership after pool = Current ownership × (1 − Pool dilution)
Final ownership = Ownership after pool × (1 − Investor ownership)
Relative dilution = (Current ownership − Final ownership) ÷ Current ownership

All percentage inputs are converted to decimals in the calculation. The option-pool adjustment is treated as an incremental pre-money dilution percentage.

What the result means

The main result is the holder’s estimated ownership after both the pool adjustment and new financing.

Actual dilution depends on the complete cap table and the precise sequencing and definitions in transaction documents.

Given: 25% current ownership, $12 million pre-money valuation, $3 million investment, and 5% additional pool dilution.

Calculation: Investor ownership = $3M ÷ $15M = 20%. Ownership after pool = 25% × 95% = 23.75%. Final ownership = 23.75% × 80% = 19.0%.

Result: Ownership falls to 19.0%, a decrease of 6 percentage points or 24% relative dilution.

What is the difference between percentage-point and relative dilution?

A drop from 25% to 19% is 6 percentage points. Relative dilution is 6 ÷ 25 = 24%, measuring the reduction against the original stake.

Does a higher pre-money valuation reduce dilution?

For the same investment amount, yes. A higher pre-money valuation gives the new investor a smaller post-money ownership percentage.

Should an existing option pool be entered?

Enter only the incremental dilution from a new or expanded pool if current ownership already reflects the existing pool.

How are SAFEs and notes handled?

They are not modeled here. Their conversion can materially change dilution and should be added through a full cap-table analysis.

Can dilution occur without raising cash?

Yes. Creating an option pool, issuing advisor shares, or converting securities can dilute ownership even if no new cash is raised.