Calculate ownership dilution, model funding rounds, and visualize cap table impact before and after investment.
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CURRENT CAP TABLE
Formula:
Dilution % = Investment / Post-Money Valuation
Post-Money = Pre-Money + Investment
Enter investment and cap table details
Add founder shares to calculate dilution
Equity dilution is one of the most critical concepts for startup founders and early-stage investors to understand. When a company raises capital by issuing new shares, the ownership percentage of existing shareholders decreases proportionally. This reduction in percentage ownership is called dilution. According to Y Combinator's fundraising guide, founders should aim to give up as little as 10% per round where possible, treat 20% as standard, and avoid rounds above 25% dilution — guidance that still matches Carta's 2024-2025 market data.
The fundamental principle of dilution is straightforward: when new shares enter the cap table, each existing share represents a smaller fraction of the total company. However, dilution is not inherently negative. If raising capital enables faster growth and higher valuations, founders may end up with a smaller percentage of a much larger pie. This is often called "accretive dilution" - where the value of your shares increases despite owning a smaller percentage. Use our pre-money valuation calculator to model different valuation scenarios.
Carta's 2026 Founder Ownership Report tracks ownership trajectory across tens of thousands of venture-backed startups. The median founding team collectively owns roughly 56% of the cap table after a priced seed round, 36% after Series A, and 23% after Series B. Digital-industry founders retain about 37.5% at Series A versus 30.5% for physical-industry founders. These numbers are aggregate across all founders, so a two-founder team at Series A typically holds roughly 18% each. Planning dilution across all anticipated rounds — not just the current one — is the only way to understand where founder ownership actually lands at exit. Model multi-round scenarios with our cap table calculator to stress-test different paths.
Quick answer: what is dilution?
Equity dilution is the reduction in existing shareholders' ownership percentage when a company issues new shares. The formula is Dilution % = Investment / Post-Money Valuation. Carta's 2025 annual data puts median seed dilution at 19-20%, Series A at 17.9%, and Series B at 12.9%, continuing a multi-year decline from 2022 highs as the market normalized.
Beyond direct investment dilution, founders must also account for option pool dilution. Most venture investors require companies to establish or refresh an employee option pool as part of funding rounds. Whether this pool comes from pre-money or post-money significantly impacts founder dilution. A 10% option pool on a pre-money basis can add 2-3% additional effective dilution to founders compared to a post-money pool. Track your equity grants with our equity split calculator to understand the impact on your cap table.
Dilution % = Investment Amount / Post-Money Valuation
Or equivalently:
Dilution % = New Shares Issued / Total Shares After Round
Post-Money Valuation = Pre-Money Valuation + Investment Amount. For example, if your pre-money is $8M and you're raising $2M, your post-money is $10M.
New Investor Ownership = Investment / Post-Money. In our example: $2M / $10M = 20%. This 20% is the dilution experienced by all existing shareholders combined.
Price Per Share = Pre-Money / Existing Shares. New Shares = Investment / Price Per Share. If you had 8M shares at $8M pre-money, price per share is $1.00, so $2M buys 2M new shares.
Each existing shareholder's new ownership = (Their Shares / Total Shares After) x 100. If founders had 80% before and dilution is 20%, founders now own: 80% x (1 - 20%) = 64%.
Quick answer: how to calculate startup dilution
Startup equity dilution is calculated as Investment Amount divided by Post-Money Valuation (where Post-Money equals Pre-Money plus Investment). A $2M investment at an $8M pre-money valuation creates a $10M post-money and 20% dilution for all existing shareholders. Each shareholder's new ownership is their pre-round percentage multiplied by (1 minus dilution percentage). Dilution compounds multiplicatively across rounds: two consecutive 20% rounds result in 36% total dilution, not 40%.
Understanding the distinction between pre-money and post-money valuation is crucial for accurately calculating dilution. These terms are often confused, but they have very different implications for ownership percentages.
Use our pre-money calculator for detailed calculations.
Use our post-money calculator for detailed calculations.
A startup with $8M pre-money valuation raises $2M. Post-money = $8M + $2M = $10M. The investor's ownership = $2M / $10M = 20%. Founders experience 20% dilution. If founders owned 100% before, they now own 80%.
A pre-seed startup with 10M authorized shares receives $500K on a $2M pre-money valuation via SAFE.
This 20% dilution is typical for pre-seed rounds. Founders retain significant control with 80% ownership, well-positioned for future fundraising.
A seed-stage startup raises $2M at $8M pre-money, with investors requiring a 10% option pool from pre-money.
The option pool shuffle increases effective dilution by 1.7%. Founders should negotiate for post-money option pools when possible. Model your runway to determine optimal raise amount.
A startup with 65% founder ownership (post-seed) raises $10M Series A at $40M pre-money from two VCs. This round maps to Carta's Q1 2025 median Series A dilution of 17.9%.
Founders retain majority control at 52%, slightly above Carta's 36.1% median post-Series A. This is considered a founder-friendly Series A outcome. Cross-check the raise size against your burn rate and runway to avoid raising more than you need.
Based on Y Combinator's fundraising guide and Carta's state-of-the-market reports, these are typical dilution ranges at each funding stage.
Carta median dilution by stage (verified, 2024-2025 data)
10-15%
Typical investment: $100K-$500K
15-25%
Typical investment: $500K-$2M
15-30%
Typical investment: $5M-$20M
15-25%
Typical investment: $15M-$50M
10-20%
Typical investment: $30M-$100M+
2026 update: record valuations are reshaping dilution math
Carta's Q1 2026 State of Private Markets report shows median seed post-money valuations hit $24M in Q4 2025, up from $18M a year earlier. Series A median post-money reached $78.7M, up 37% year-over-year. Rising valuations mean founders can raise larger rounds at the same dilution level, but the AI premium is skewing averages: AI startups raise at roughly 5x the median valuation of non-AI peers at the same stage. Over 60% of all venture capital on Carta in Q1 2026 went to AI companies. Non-AI founders should benchmark against non-AI medians, not headline figures. Use our SaaS valuation calculator or funding calculator to model valuations specific to your sector.
Quick answer: does dilution vary by industry?
Yes. Carta's Q1 2025 healthcare sector report shows healthcare startups face 21.8% median dilution at Series A, roughly 5 percentage points above the overall median of 17.9%. Pharma/biotech sub-sector dilution at Series A exceeded 30% for three consecutive years before dropping to 25.1% in Q1 2025. Capital-intensive sectors (biotech, hardware, climate tech) typically dilute more because longer development cycles require larger rounds. Digital-first startups (SaaS, fintech) tend to dilute less; Carta's 2026 Founder Ownership Report shows digital-industry founders retain 37.5% at Series A versus 30.5% for physical-industry founders. Use our funding calculator to model how much capital your specific industry and growth stage requires.
10-15%
Standard option pool ranges from 10-15% post-money. Y Combinator recommends 10-20% depending on hiring needs.
While dilution calculations are essential for fundraising planning, founders should understand their limitations to make well-informed decisions.
SAFEs, convertible notes, and other instruments convert at future rounds with discounts or caps. Accurate dilution modeling requires knowing conversion terms, which may not be finalized until the priced round closes.
Preferred shareholders often have anti-dilution protection (weighted average or full ratchet) that adjusts their share count in down rounds. This can significantly increase founder dilution if valuations decrease.
Ownership percentage doesn't tell the full story. Participating preferred stock and liquidation preferences mean investors may receive disproportionate returns relative to their ownership in certain exit scenarios.
Projecting dilution across multiple rounds requires assumptions about future valuations and raise amounts. Market conditions, company performance, and investor appetite can dramatically change these assumptions.
Employee option exercises, advisor grants, and board compensation create ongoing dilution between funding rounds. Factor in 1-3% annual dilution from these sources when planning long-term ownership targets. Track your vesting schedule to model option pool consumption between rounds.
Carta's Q1 2026 data shows over 60% of all venture capital went to AI companies. AI foundation model startups raise at roughly 5x the median valuation of non-AI peers at the same stage, which means headline valuation benchmarks may overstate what non-AI founders can expect. Benchmark your raise against sector-specific medians, not overall market averages.
For more guidance, see the Valuefy blog.
Pair this tool with the Vesting Calculator, Cap Table Calculator, and Funding Calculator to cross-check inputs. Use the CAC Calculator and LTV Calculator to assess whether additional capital will drive efficient growth. Explore the Startup & Fundraising tools hub for the complete toolkit.
Dilution equals investment divided by post-money valuation. A $2M investment at $10M post-money creates 20% dilution for all existing shareholders.
Aim to retain 50%+ founder ownership after Series A. This preserves control and maintains alignment incentives through later growth stages.
Option pool placement matters significantly. A pre-money option pool can add 2-3% additional founder dilution compared to post-money allocation.
Median dilution (Carta 2025 Annual Review): Seed 19-20%, Series A 17.9%, Series B 12.9%. Overall median across seed-to-Series C fell from 18% to 16% during 2025. Healthcare startups dilute 1-5pp above average, especially at Series A.
Focus on value, not just percentage. Owning 20% of a $100M company is worth more than 80% of a $10M company. Calculate your expected ownership value at target exit scenarios.
Record 2026 valuations (median seed $24M, Series A $78.7M post-money per Carta) mean founders can raise larger rounds at stable dilution, but AI companies are driving headline averages. Non-AI founders should benchmark against sector-specific medians.
Sources and Further Reading: