Startup Equity Dilution Calculator
Model how your founder ownership dilutes through Seed, Series A, and Series B funding rounds. Enter your pre-money valuation and amount raised to see a live cap table and stacked ownership chart.
Startup Equity Dilution Calculator
Model your cap table across seed, Series A, and Series B rounds
Total shares issued to all founders at incorporation
Reserved for employees — dilutes all shareholders equally
Cap Table Summary
Total shares after all rounds: 1,388,889
| Stakeholder | Shares | Ownership |
|---|---|---|
Founders | 1,000,000 | 72.00% |
ESOP pool | 111,111 | 8.00% |
Seed investors | 277,778 | 20.00% |
5 Founder Tips on Equity Dilution
- Dilution is fine if the valuation grows: Owning 50% of a £10M company is worth more than 100% of a £2M company. Focus on growing the pie, not protecting your slice.
- Watch the option pool shuffle:Investors often ask for the ESOP pool to be created pre-investment (from founders' shares), which dilutes founders before the round closes. Negotiate to create it post-money instead.
- SEIS/EIS limits: UK Seed Enterprise Investment Scheme (SEIS) gives investors 50% income tax relief on up to £200,000. EIS gives 30% relief on up to £1M. Qualifying companies must not have raised over £250,000 SEIS / £12M EIS. Structure your round to preserve eligibility.
- Drag-along and tag-along rights: Drag-along lets majority shareholders force minority holders to sell. Tag-along protects minority holders by letting them join a sale. Understand these clauses in your shareholder agreement before signing.
- Pro-rata rights: Existing investors with pro-rata rights can invest in future rounds to maintain their percentage. This is good for supportive investors but can complicate cap-table management at scale.
How Equity Dilution Works
Every time you raise a funding round, you issue new shares to investors. This increases the total share count and reduces every existing shareholder's percentage — a process called dilution. The key formula is:
- Price per share = pre-money valuation ÷ total shares before round
- New investor shares = amount raised ÷ price per share
- Investor % = new shares ÷ (total shares + new shares)
SEIS & EIS — UK Tax-Advantaged Investment
Qualifying UK startups can offer investors generous tax relief under SEIS (50% income tax relief) and EIS (30% income tax relief). This makes raising early-stage capital significantly easier. Ensure your company qualifies before fundraising — see HMRC's Advance Assurance service.
Key Terms
Pre-money valuation: What investors agree the company is worth before their money arrives.
Post-money valuation: Pre-money + amount raised.
ESOP: Employee Stock Option Pool — reserved for future hires and advisors.
Pro-rata rights:Existing investors' right to maintain their ownership percentage in future rounds.