Startup Dilution Calculator

Equity dilution happens when a startup issues new shares to investors during a funding round. When new shares are created, each existing share represents a smaller percentage of the total company. For example, if a founder owns 10,000,000 shares out of 10,000,000 total (100%), and the company issues 2,500,000 new shares to a Series A investor, the founder now owns 10,000,000 out of 12,500,000 shares (80%). The founder's number of shares hasn't changed, but their percentage ownership has decreased from 100% to 80%.

Typical dilution per round is 15-25% at the seed stage, 20-30% at Series A, and 15-20% at Series B and beyond. After three to four rounds of funding, most founders retain 10-20% ownership at IPO. The exact dilution depends on your pre-money valuation and how much capital you raise. Raising at higher valuations means less dilution for the same amount of capital.

Founders can minimize dilution by raising at higher valuations, raising less capital per round, extending runway through revenue growth, negotiating smaller option pools, and using non-dilutive funding like revenue-based financing or grants for early capital needs. The most powerful lever is building a business that commands a higher valuation before each raise — strong revenue growth, retention metrics, and competitive dynamics all drive higher pre-money valuations.

Anti-dilution protection is a term sheet provision that protects investors if the company raises a future round at a lower valuation (a 'down round'). The most common form is weighted-average anti-dilution, which adjusts the investor's conversion price downward, effectively giving them more shares. This means founders absorb extra dilution in down-round scenarios. Full-ratchet anti-dilution is more aggressive and can be devastating to founder ownership — it resets the investor's price to the new lower price entirely.