Venture Round Post Money Dilution Term Tool

Description

Return postMoney = preMoney+investment, newShares = previousShares*investment/preMoney and founderPostFraction = founderShares/[previousShares*(1+investment/preMoney)].

A primary equity investment increases a company's cash valuation and issues new shares at an assumed price. Existing holders retain their share counts but their ownership fractions change; the result depends on which securities and transaction terms enter the share base.

Return postMoney = preMoney+investment, newShares = previousShares*investment/preMoney and founderPostFraction = founderShares/[previousShares*(1+investment/preMoney)].

When to use this tool

Use Venture Round Post Money Dilution Term when checking one simple pre-money primary investment and its founder dilution.

How to use the tool and how it works

Enter preMoney, investment, previousShares, founderShares. Use the units and conventions below.
Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
Read postMoney, newShares, founderPostFraction. Use the output convention below.

Require positive preMoney and previousShares, nonnegative investment and founderShares between zero and previousShares. Return postMoney = preMoney+investment, newShares = previousShares*investment/preMoney and founderPostFraction = founderShares/[previousShares*(1+investment/preMoney)]. Values share a currency, and the founder fraction is not percent.^[1]

Input field	Meaning and units	Accepted input
preMoney	Positive equity valuation before the primary investment.	Required. Finite number; strictly above 0.
investment	Investment	Required. Finite number; minimum 0.
previousShares	Positive prior share base on which the share price is modeled.	Required. Finite number; strictly above 0.
founderShares	Founder Shares	Required. Finite number; minimum 0.

Output field	Interpretation	Returned shape
postMoney	Post Money	Required. Finite number.
newShares	New Shares	Required. Finite number.
founderPostFraction	Founder ownership fraction after issuing the modeled new shares.	Required. Finite number.

json

{
  "input": {
    "preMoney": 8000000,
    "investment": 2000000,
    "previousShares": 1000000,
    "founderShares": 600000
  },
  "output": {
    "postMoney": 10000000,
    "newShares": 250000,
    "founderPostFraction": 0.48
  }
}

Limitations and assumptions

This assumes a single primary investment priced at the pre-money share value. Fractional shares are allowed; option pools, convertibles, preferences, transaction costs and secondary sales are omitted, and no company valuation or legal ownership is verified.
Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.

Alternative or Complementary methods

Use a complete capitalization table with option pools, convertible instruments, preferences and legal terms for a real financing decision.

References

Calculation and input contract: entrepreneurship-studies/venture-round-post-money-dilution-term — tool.io

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