1. Scope
Models founder ownership dilution across a sequence of funding rounds, each with a name, investment amount, and pre-money valuation. There is no option-pool input, anti-dilution provision, liquidation preference, or convertible-note conversion.
2. Inputs and outputs
Inputs
- rounds array
Each round: name, investmentAmount, preMoneyValuation. Founder starts at 100% and is diluted round by round.
Outputs
- rounds
Per round: postMoneyValuation, newSharesPercent, founderOwnershipPercent.
Engine source: src/lib/dilution-calculator/engine.ts
3. Formula / scoring logic
for each round:
post_money = pre_money + investment
new_shares% = investment / post_money * 100
founder% = founder%_prev * (1 - new_shares% / 100)4. Assumptions
- Founder ownership begins at 100% before the first round; each round dilutes by that round's new-share percentage.
- There is no option-pool carve — only new-investor dilution is modeled.
- All shares are common — preferred stacks, notes, and SAFEs are out of scope.
5. Data sources
- NVCA Model Legal Documents as of 2024
6. Known limitations
- Does not model SAFE or convertible-note conversion — conversion requires cap-table software (Carta, Pulley).
- Liquidation preferences can make apparent ownership misleading in exit scenarios.
7. Reproducibility
Input
rounds = [{Seed, investment $1M, pre-money $4M}, {Series A, investment $3M, pre-money $12M}].
Expected output
Seed: postMoney $5M, newShares 20%, founder 80%. Series A: postMoney $15M, newShares 20%, founder 64%.
8. Change log
- 2026-04-24 methodology page first published.
Worked example
Run live against the same engine this site ships
(/engines/dilution-calculator.js).
The inputs and outputs below are recomputed on every build and
independently re-verified in CI — they are never hand-authored.
Input
- tool
- dilution_calculator
- rounds[0].name
- Seed
- rounds[0].investment_amount
- 500000
- rounds[0].pre_money_valuation
- 2000000
Output
- rounds[0].name
- Seed
- rounds[0].investmentAmount
- 500000
- rounds[0].preMoneyValuation
- 2000000
- rounds[0].postMoneyValuation
- 2500000
- rounds[0].newSharesPercent
- 20
- rounds[0].founderOwnershipPercent
- 80
Frequently asked questions
- What does the Dilution Calculator calculate?
- Models founder ownership dilution across a sequence of funding rounds, each with a name, investment amount, and pre-money valuation. There is no option-pool input, anti-dilution provision, liquidation preference, or convertible-note conversion.
- What inputs does the Dilution Calculator need?
- It takes 1 input: rounds. Outputs returned: rounds.
- What formula does the Dilution Calculator use?
- The exact computation is: for each round:; post_money = pre_money + investment; new_shares% = investment / post_money * 100; founder% = founder%_prev * (1 - new_shares% / 100)
- Can I verify the Dilution Calculator with a worked example?
- Yes. With rounds = [{Seed, investment $1M, pre-money $4M}, {Series A, investment $3M, pre-money $12M}]. the tool returns Seed: postMoney $5M, newShares 20%, founder 80%. Series A: postMoney $15M, newShares 20%, founder 64%.
- Where does the Dilution Calculator get its benchmark data?
- Reference data is sourced from: NVCA Model Legal Documents (as of 2024).
- What can the Dilution Calculator not tell me?
- Known limitations: Does not model SAFE or convertible-note conversion — conversion requires cap-table software (Carta, Pulley). Liquidation preferences can make apparent ownership misleading in exit scenarios.