See Your Ownership Shrink (In a Good Way)
Model multiple funding rounds and understand exactly how dilution works. Make smarter decisions about when and how much to raise.
Model Your Funding Rounds
Before any funding (typically 80-100% for founders)
Good position. Most successful founders retain 15-25% through Series B.
Dilution Breakdown by Round
| Round | Pre-Money | Raise | Option Pool | Round Dilution | Your Ownership |
|---|---|---|---|---|---|
| Start | — | — | — | — | 80.0% |
| Seed | $8.0M | $2.0M | 10% | -30.0% | 57.6% |
| Series A | $30.0M | $10.0M | 10% | -35.0% | 38.9% |
Exit Scenarios
What you'd take home at different exit valuations (before taxes, assuming no liquidation preferences).
Note: These assume simple equity. Liquidation preferences, participating preferred, and other terms can significantly reduce founder proceeds in lower exit scenarios.
Why Option Pool Dilutes You (Not Investors)
VCs require option pool expansion before investing. This dilution comes from your shares, not theirs. A 10% option pool at a $10M pre-money means you're really at $9M.
Typical Option Pools by Stage
| Pre-Seed | 10-15% |
| Seed | 10-15% |
| Series A | 15-20% |
| Series B+ | 5-10% refresh |
How Dilution Actually Works
Dilution is simple math but feels confusing because it compounds. Each round dilutes you in two ways: the investment itself, and any option pool expansion required by investors.
Investment dilution: If you raise $2M at $8M pre-money, your post-money is $10M. Investors own 20% ($2M / $10M). Your 100% becomes 80%.
Option pool dilution: VCs typically require you to set aside 10-20% for employee equity before they invest. This comes from your shares, not theirs. A 10% option pool means your 80% becomes 72% before factoring in the next round.
Compounding effect: After Seed and Series A, a founder starting at 80% might own 35-45%. This is normal. What matters is whether that 35% is worth more than 100% of nothing.
Good Dilution vs. Bad Dilution
Good Dilution
- • Increases company value more than % given up
- • Funded growth you couldn't achieve bootstrapped
- • Strategic value beyond just capital
- • 20% of $100M > 50% of $10M
- • Enables hiring, product development, expansion
Bad Dilution
- • Down rounds that reset valuation
- • Raising more than needed "just in case"
- • Taking money from wrong partners
- • Excessive option pools you won't use
- • Bridge rounds with punitive terms
Related Resources
Dilution FAQ
How much should I get diluted per round?
15-25% dilution per round is typical and healthy. If you're giving up more than 30% in a single round, something's wrong—either your valuation is too low or you're raising too much.
What ownership should founders have at exit?
Successful founders typically retain 10-25% through Series B/C. Mark Zuckerberg kept 28% through Facebook's IPO. Brian Chesky had 13% at Airbnb's IPO. The goal is valuable equity, not high percentage.
Why does the option pool dilute me and not investors?
VCs calculate ownership based on post-pool pre-money. The option pool is carved out before they invest, so it comes from existing shareholders (you). Negotiate the pool size—don't accept 20% if you only need 12% to hit next milestones.
Should I raise at a higher valuation to minimize dilution?
Sometimes. But inflated valuations create "down round" risk if you can't grow into them. A down round triggers anti-dilution provisions and destroys morale. Better to raise at fair value and exceed expectations.