Q: How do you calculate startup dilution?

For a plain priced round: dilution % = new shares ÷ (existing shares + new shares) , which equals investment ÷ post-money valuation . Example: $2M raised at an $8M pre-money ($10M post) = 20% to the new investor. But the headline number understates reality: an option pool top-up and converting SAFEs add shares before the investor's are priced, so founders' true dilution is higher. The simulator above computes all three layers.

Q: What is the option pool shuffle?

It's the standard term-sheet mechanic where the option pool is created or topped up before the new money is priced — so the dilution from those pool shares comes out of the founders' slice, not the new investor's. An '18% round' with a 10% pool top-up really costs founders ~25%+. Investors insist on it because they want the hiring pool funded by the people who benefit from the hires. Model it above by setting the pool target — watch the founders' rows drop further than the headline percentage.

Q: How does a SAFE convert in a priced round?

A SAFE converts into shares at the lower of (a) the valuation cap and (b) the pre-money valuation minus the discount , divided by the fully-diluted pre-money share count. Example: a $500k SAFE with a $10M cap and 20% discount converting at an $8M pre-money uses the discounted $6.4M (lower than the cap): 500,000 ÷ (6,400,000 ÷ 10,000,000 shares) = 781,250 shares. Enter your SAFEs in the simulator — it applies this rule per note.

Q: How much dilution is normal per funding round?

Rough benchmarks: pre-seed/seed rounds dilute 15–25% , Series A 15–25% , later rounds 10–20% each. A founding team that starts at 100% typically holds ~55–65% after seed and ~35–50% after Series A, before the option pool is counted. Anything far outside these bands — a 40% seed round, say — is worth pushing back on or restructuring.

Q: Does dilution mean I lose money?

Not automatically. You own a smaller percentage of a more valuable company : 40% of a $20M company ($8M) beats 60% of a $10M company ($6M). Dilution hurts when the round is down (lower valuation than last time) or when the terms — big pool shuffle, heavy SAFE stack — take more than the headline percentage suggests. That's exactly what the before/after table is for.

Q: What is the difference between pre-money and post-money valuation?

Pre-money is what the company is worth before the new cash lands; post-money = pre-money + investment . The new investor's ownership is investment ÷ post-money. Price per share is derived from the pre-money divided by the fully-diluted share count after the pool top-up and SAFE conversions — which is why the order of operations matters and why a simulator beats a single formula.

Question 1

How do you calculate startup dilution?

Accepted Answer

For a plain priced round: dilution % = new shares ÷ (existing shares + new shares), which equals investment ÷ post-money valuation. Example: $2M raised at an $8M pre-money ($10M post) = 20% to the new investor. But the headline number understates reality: an option pool top-up and converting SAFEs add shares before the investor's are priced, so founders' true dilution is higher. The simulator above computes all three layers.

Question 2

What is the option pool shuffle?

Accepted Answer

It's the standard term-sheet mechanic where the option pool is created or topped up before the new money is priced — so the dilution from those pool shares comes out of the founders' slice, not the new investor's. An '18% round' with a 10% pool top-up really costs founders ~25%+. Investors insist on it because they want the hiring pool funded by the people who benefit from the hires. Model it above by setting the pool target — watch the founders' rows drop further than the headline percentage.

Question 3

How does a SAFE convert in a priced round?

Accepted Answer

A SAFE converts into shares at the lower of (a) the valuation cap and (b) the pre-money valuation minus the discount, divided by the fully-diluted pre-money share count. Example: a $500k SAFE with a $10M cap and 20% discount converting at an $8M pre-money uses the discounted $6.4M (lower than the cap): 500,000 ÷ (6,400,000 ÷ 10,000,000 shares) = 781,250 shares. Enter your SAFEs in the simulator — it applies this rule per note.

Question 4

How much dilution is normal per funding round?

Accepted Answer

Rough benchmarks: pre-seed/seed rounds dilute 15–25%, Series A 15–25%, later rounds 10–20% each. A founding team that starts at 100% typically holds ~55–65% after seed and ~35–50% after Series A, before the option pool is counted. Anything far outside these bands — a 40% seed round, say — is worth pushing back on or restructuring.

Question 5

Does dilution mean I lose money?

Accepted Answer

Not automatically. You own a smaller percentage of a more valuable company: 40% of a $20M company ($8M) beats 60% of a $10M company ($6M). Dilution hurts when the round is down (lower valuation than last time) or when the terms — big pool shuffle, heavy SAFE stack — take more than the headline percentage suggests. That's exactly what the before/after table is for.

Question 6

What is the difference between pre-money and post-money valuation?

Accepted Answer

Pre-money is what the company is worth before the new cash lands; post-money = pre-money + investment. The new investor's ownership is investment ÷ post-money. Price per share is derived from the pre-money divided by the fully-diluted share count after the pool top-up and SAFE conversions — which is why the order of operations matters and why a simulator beats a single formula.

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