Equity Financing Dilution CalculatorFree online financial calculator — instant results, no sign-up
Estimate ownership dilution from a new cash investment at a stated pre-money valuation.
Estimates only, based on the inputs and assumptions shown. This is not financial, investment, tax, or legal advice. Prices, rates and local rules may change; crypto scenarios do not predict returns. Confirm important decisions with a qualified professional.
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About the Equity Financing Dilution Calculator
The Equity Financing Dilution Calculator estimates how a new cash investment changes ownership at a stated pre-money valuation. It calculates the post-money valuation, the new investor’s ownership percentage, and an existing holder’s ownership after financing. With the default inputs of $4,000,000 pre-money valuation, $1,000,000 new investment, and 60% existing ownership, the holder’s stake falls to 48%.
- Pre-money valuation ($)
- The company’s agreed equity value immediately before the new investment, in dollars, with a default of $4,000,000.
- New investment ($)
- The cash invested in exchange for newly issued equity, in dollars, with a default of $1,000,000.
- Existing holder ownership (%)
- The existing holder’s percentage of the company immediately before financing, with a default of 60%.
Formula and method
V_post = V_pre + I; P_new = 100 × I / V_post; H_after = H_before × V_pre / V_post. With the default inputs: V_post = $4,000,000 + $1,000,000 = $5,000,000.00; P_new = 100 × $1,000,000 / $5,000,000 = 20%; H_after = 60 × $4,000,000 / $5,000,000 = 48%.
- V_prePre-money equity valuation in dollars.
- INew cash investment in dollars.
- V_postPost-money equity valuation in dollars.
- P_newNew investor ownership expressed as a percentage.
- H_beforeExisting holder ownership before financing, entered as a percentage number such as 60.
- H_afterExisting holder ownership after financing, expressed as a percentage.
Add the new investment to the pre-money valuation to calculate post-money valuation. Divide the investment by post-money valuation and multiply by 100 to calculate the new investor’s ownership percentage. Multiply the existing holder’s starting ownership percentage by the ratio of pre-money to post-money valuation to calculate the holder’s remaining stake.
Worked example
These are the calculator's starting values and the results it actually produces for them.
Inputs
- Pre-money valuation4000000 $
- New investment1000000 $
- Existing holder ownership60 %
Results
- Post-money valuation$5,000,000.00
- New investor ownership20%
- Existing holder ownership after financing48%
How to use the Equity Financing Dilution Calculator
- 1Enter the company’s pre-money equity valuation in dollars; the default is $4,000,000.
- 2Enter the new cash investment in dollars; the default is $1,000,000.
- 3Enter the existing holder’s ownership before the financing as a percentage from 0 to 100; the default is 60%.
- 4Review the calculated post-money valuation, new investor ownership, and existing holder ownership after financing.
- 5Compare the holder’s before-and-after percentages: with the defaults, ownership changes from 60% to 48%, a reduction of 12 percentage points.
Reading your result
Post-money valuation is the pre-money equity value plus the new cash investment: $5,000,000.00 with the defaults. New investor ownership is the share of the company issued for that investment: 20%. Existing holder ownership after financing is the holder’s reduced share of the enlarged equity base: 48%. The drop from 60% to 48% is 12 percentage points, or a 20% relative reduction in ownership; it does not by itself mean the holder’s stake has lost dollar value.
Limitations
This is a simplified primary equity financing model, not a full capitalization-table analysis. It assumes the investment goes into the company, the existing holder does not participate in the new investment, and all existing holders dilute proportionately on a consistent ownership basis. It excludes option-pool increases, SAFEs, convertible notes, warrants, anti-dilution adjustments, secondary share sales, transaction fees, and differences in share rights such as liquidation preferences. Use a positive pre-money valuation, a nonnegative investment, and an existing ownership percentage between 0 and 100. Results are estimates based on the stated valuation, not an independent valuation or a measure of proceeds on exit.
Common questions
Why does a $1,000,000 investment buy 20% rather than 25% at a $4,000,000 pre-money valuation?+
The investor’s ownership is measured against the post-money valuation, which includes the new cash. Dividing $1,000,000 by $5,000,000 gives 20%; dividing by the pre-money valuation would not give the investor’s post-financing ownership.
Why does the existing holder’s 60% ownership become 48%?+
After the new investor receives 20%, all pre-existing equity together represents 80% of the company. The holder retains 60% of that pre-existing equity, so 60% × 80% = 48% of the company after financing.
Does the change from 60% to 48% mean the holder loses 20% of the stake’s dollar value?+
Not under this simplified valuation model. The holder’s implied stake value is $2,400,000 both before financing, at 60% of $4,000,000, and afterward, at 48% of $5,000,000. Actual economic value can differ because of share rights, liquidity, and future business performance.
Can this calculator include an option-pool increase or a SAFE conversion in the same round?+
Not directly. These events can add shares and change the ownership base or investment pricing. Use a capitalization-table model that explicitly includes those issuances and their timing to estimate combined dilution.
Does the calculator save my information?+
Calculations run in your browser. While signed in, inputs and results are automatically recorded in account history; saving a result creates a separate saved record.
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Results are estimates for informational purposes and are not financial, medical or legal advice.