Startup Equity Dilution Calculator

Free equity dilution and ownership target calculator for startups. Determine the number of shares needed to achieve your ownership target and see how your captable will appear after the next funding round.

What is equity dilution?

Some founders choose to bootstrap or fund their businesses themselves, but companies with substantial expenses typically seek external funding to support early growth.

When new shares are issued during funding rounds, without the current shareholders selling their share, it leads to a dilution of the existing shareholders' ownership.

Ownership

It is common among investors to have an ownership target on the startups they invest in. There are several explanations: to follow their investment thesis, for tax matters, or to manage a leaner portfolio. This calculator makes it easy to calculate how many shares an investor should own if they have a specific ownership objective. For example, how much should a venture capital fund invest if it wants 5% of the company funding round is completed.

How to use the calculator

• Existing Shares: number of existing shares before the funding round. If there is more than one investor, also take into account their shares.
• Investment: the amount the investor wants to invest.
• Target Percentage: % the investor wants to reach: 5%, 10%...

Results

• New shares issued: number of new shares to be issued for this partner to reach the target percentage. Formula: Existing shares / (1- Target Percentage /100 ) - Existing Shares
• Total Shares: Total shares after transaction is completed. Formula: Existing Shares + New Shares Issued.
• Pre-money valuation: Valuation of the company before completing the funding round. Formula: Investment / (New shares issued * Existing shares)
• Post-money valuation: Valuation of the company after completing the round. Formula: Pre-money valuation + Investment.