business · 2026-05-01
Project founder equity ownership through multiple funding rounds — pre-money, post-money, option pool refresh, and dilution per round.
| Pre-money valuation | $30,000,000 |
| Investment amount | $8,000,000 |
| Target option pool post-round % | 12% |
| Current founder ownership % | 65% |
| Current option pool % | 8% |
| Dilution this round | 17.4% |
| Post-money valuation | $38,000,000 |
| Option pool refresh added | 7.2% |
Every priced funding round dilutes founders by:
VCs require a target option pool (10-15% post-round). If the current pool is smaller, the refresh comes out of pre-money — meaning EXISTING shareholders (founders) take the dilution from the pool refresh, not the new investors. This is standard but worth understanding.
Default scenario: $30M pre / $8M invest / 12% pool target → founder dilutes ~21% of their stake. A 65% owner becomes ~51%.
Each round multiplicatively dilutes:
Founders end at: 100% × (1 − 0.20) × (1 − 0.25) × (1 − 0.18) × (1 − 0.12) = ~43% combined founders.
Pre-money pool: shares created BEFORE the investor invests, dilutes existing shareholders only. Post-money pool: shares created AFTER, dilutes everyone proportionally including new investor. VCs always want pre-money for negotiating leverage. Founders should push for post-money — material difference at scale.
Sometimes — depends on growth runway. $5M raise at $20M pre = 20% dilution. $10M raise at $50M pre = 17% dilution but 2× cash. The cash gives more time to grow before next round. Often math favors more capital + slightly more dilution if confident in execution.
A recap happens in down rounds where the new round price is below previous round price. Triggers anti-dilution adjustments that often dilute founders heavily. Most common: full ratchet (worst for founders) or weighted-average (much friendlier). Always insist on weighted-average anti-dilution at term sheet.