Begin with a dated cap table
Name the ownership view and list what it includes. Outstanding and fully diluted measures can tell different stories if compared casually. Use one consistent basis for the before-and-after analysis, and preserve the source of every input.
Separate transaction steps
New money, pool changes, and conversions belong on separate lines. The worked examples show how an unchanged headline valuation can produce different founder percentages when the price-setting capitalization changes. Actual instruments need their own conversion logic.
Evaluate the trade-off
A lower percentage is not automatically a lower economic value, but a high valuation is not a guarantee of a favorable deal. Connect the dilution model with the company’s operating plan and the rights created by the financing.
Define the denominator before debating dilution.
Go Deeper into Equity Dilution
Equity Dilution from Financing: Worked Examples for Founders
Follow equity dilution through a priced round, option-pool increase, and simplified SAFE scenario with clearly defined ownership denominators.
Venture Capital Equity: Valuation, Preferences, and Control
Explore venture capital equity with clear examples of pre-money valuation, liquidation preferences, option pools, governance, and financing trade-offs.
Private Equity Explained: Funds, Buyouts, and Ownership Economics
Separate private equity fund interests from company ownership, and examine buyout financing, cash flows, performance measures, fees, and incentives.