Cap Table Dilution Simulator

What This Calculator Does

The Cap Table Dilution Simulator is a user-friendly tool designed to help you model and visualize how ownership stakes change across funding rounds. Whether you are a founder, investor, or someone exploring startup equity, this calculator enables you to see the impact of convertible notes, option pools, and new investments on your cap table in seconds. By providing quick, comprehensive calculations, you gain valuable insight into dilution, ensuring you are always prepared for your next negotiation or investment decision.

How to Use This Calculator

1. Enter Founder Shares: Start by specifying the total number of shares issued to founders before any outside investment or convertibles.
2. Add Convertible Shares (SAFE/Notes): Input the number of shares that will convert from SAFEs or convertible notes at the time of the round. This accounts for early-stage investors whose investment will convert into equity.
3. Set Pre-money Valuation: Enter the company valuation before the new investment round. This figure is used to price the new shares and determine ownership percentages post-investment.
4. Input Investment Amount: Specify the amount of new capital being raised in the current round. This is the money that new investors are putting into your company.
5. Define Target Post-round Option Pool Percentage: Enter the desired percentage of the cap table you want to reserve for the employee option pool after the round closes.
6. Model Multiple Rounds: If you want to simulate more than one round, fill in the additional fields for subsequent rounds (Pre-money Valuation, Investment Amount, Target Option Pool percent) to see the cumulative impact.
7. Review Results: Instantly view the calculated post-round ownership percentages for founders, investors, convertible holders, and the option pool, along with total shares outstanding.

Definitions of Key Terms

Founder Shares

The total number of shares held by the company’s founders prior to any outside investment, convertible notes, or option allocations.

Convertible Shares (SAFE/Notes)

Shares to be issued to early investors holding convertible instruments (such as SAFEs or convertible notes) that convert into equity during a financing round.

Pre-money Valuation

The company’s valuation before receiving new investment. This value is critical for pricing new shares and determining dilution.

Investment Amount

The total amount of new capital being invested in the company during the current round. This determines how many new shares are issued to investors.

Target Post-round Option Pool %

The intended percentage of the company’s shares that will be set aside in an employee stock option pool after the round closes. Used to attract and retain employees.

Founder Ownership

The percentage of total shares held by founders after all conversions, investments, and option pool allocations are accounted for.

Investor Ownership

The percentage of total shares held by new investors as a result of their investment in the current round.

Option Pool

The reserved portion of the company’s shares designated for current and future employees as part of an equity incentive plan.

Convertible Holders

The percentage of total shares held by investors whose convertible instruments (SAFEs/Notes) are converted into equity in the round.

Total Shares Outstanding

The sum of all shares held by founders, investors, convertible holders, and the option pool after the round closes.

Calculation Methodology

This calculator models dilution by sequentially applying convertible conversions, new investments, and option pool allocations. Here is a step-by-step outline of the core calculations:

Start with Founder Shares

Add Convertible Shares to Founder Shares to get Pre-investment Shares

Calculate new Option Pool size:
  OptionPoolShares = [TargetPostRoundOptionPool%] * (Pre-investment Shares + OptionPoolShares + NewInvestorShares)

Calculate New Investor Shares:
  NewInvestorShares = InvestmentAmount / (PreMoneyValuation / (Pre-investment Shares + OptionPoolShares))

Iterate if necessary to solve for OptionPoolShares and NewInvestorShares (since both depend on total shares outstanding)

Total Shares Outstanding = Founder Shares + Convertible Shares + Option Pool Shares + New Investor Shares

Founder Ownership % = Founder Shares / Total Shares Outstanding
Convertible Holder % = Convertible Shares / Total Shares Outstanding
Investor Ownership % = New Investor Shares / Total Shares Outstanding
Option Pool % = Option Pool Shares / Total Shares Outstanding

Practical Scenarios

• First-Time Fundraising: You are a founder preparing to raise your first round of outside capital. Input your current founder shares, any outstanding SAFE or note investments, and the desired option pool size to see how new investment will impact your ownership and the cap table.
• Modeling Convertible Note Conversions: Your company raised initial funds with convertible notes or SAFEs. Use the calculator to convert these into equity, add a new investment round, and visualize how much of your company each party will own after the round.
• Planning for Option Pool Expansion: You want to expand your employee option pool to attract new talent ahead of a significant funding event. Enter your target post-round option pool percentage to see how this affects founder and investor dilution.
• Multi-Round Scenario Analysis: As your startup grows, simulate multiple rounds by entering new valuations and investments for each round. This helps forecast long-term dilution and supports strategic planning.

Advanced Tips & Best Practices

• Experiment with different target option pool percentages to understand how negotiation over option pool sizing can shift dilution between founders and investors.
• Adjust pre-money valuation and investment amounts to model various fundraising scenarios. This helps you prepare for negotiations and optimize for founder retention.
• When modeling multiple rounds, pay close attention to cumulative dilution. Use export or print functions (if available) to track changes between rounds.
• For convertible note holders, make sure to use realistic conversion assumptions (discounts, valuation caps, etc.) so your calculations reflect actual terms.
• Regularly update your cap table with real-world changes and compare them to your modeled scenarios to ensure accuracy and sound decision-making.

Frequently Asked Questions (Optional)

Do I need to include all prior convertible notes or SAFEs?

Yes. For the most accurate simulation, include all outstanding convertible securities that will convert in the round. This ensures the dilution is calculated correctly.

How is the option pool “pre-money” or “post-money”?

This calculator models the option pool as a post-round percentage. The target percentage you enter is applied after all investment and conversions, which is the common approach in many venture rounds.

Can I use this for multiple rounds?

Absolutely. You can input additional valuations, investment amounts, and option pool targets for multiple rounds, allowing you to project dilution over the entire fundraising journey.