- Post money valuation
- 10,000,000 EUR
- Investor stake
- 20 %
- Your stake after the round
- 48 %
- Your stake after pool top up
- 43.2 %
Calculating ownership reduction in a funding round
Post money valuation is calculated as pre money valuation plus the new money raised. Every existing shareholder's percentage is then multiplied by pre money valuation divided by post money valuation to get their new, diluted percentage. This works because the number of new shares issued is proportional to the money raised relative to the pre money value of the company, which is the same math behind every cap table update.
- Pre money valuation: what the company is worth before the new investment
- Amount raised: new money invested in this specific round
- Post money valuation: pre money valuation plus amount raised
- Dilution factor: pre money valuation divided by post money valuation
Effect of a two million euro raise on ownership
A company is valued at 8 million euros pre money and raises 2 million euros, giving a post money valuation of 10 million euros. A shareholder who owned 5 percent before the round now owns 5 percent multiplied by 8 million divided by 10 million, which is 4 percent. Their percentage fell by 1 percentage point, from 5 percent to 4 percent, even though the number of shares they hold has not changed, which is how every funding round affects existing holders.
If a new option pool is created as part of the round, that pool is usually carved out of the pre money valuation, which increases dilution to existing shareholders beyond the effect of the new investment alone.
Missing SAFEs and anti dilution protection impact
- The calculator assumes a simple round with no special terms such as anti dilution protection or liquidation preferences
- It does not account for convertible notes or SAFEs converting at the same time, which can add extra dilution
- Real term sheets often include an expanded option pool before the round, which this basic version may not capture unless entered separately
Questions on what a new round does to your stake
- Does dilution reduce the value of my shares?
- Not necessarily. Dilution reduces your percentage, but if the company's value rises enough because of the new funding, the value of your smaller percentage can still be higher than before.
- What if an option pool is created at the same time as the round?
- Enter the pool as part of the pre money valuation calculation, since investors typically require the pool to be created before their money comes in, which increases dilution for existing shareholders.
- Does this apply to convertible notes and SAFEs?
- Not directly. Those instruments convert into shares under their own terms, usually with a discount or valuation cap, which should be modelled separately before applying this formula.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.