Founders and employees ask two different questions about the same cap table. A founder wants to know how much of the company they'll still own after raising money; an employee wants to know what an option grant is actually worth. Both answers come from the same arithmetic — and neither should require handing your email to a cap-table vendor to get it.
How dilution actually works
Every time a startup issues new shares, existing owners hold a smaller fraction of a larger whole. When an investor puts in money at a given pre-money valuation, the company is worth pre-money plus the raise afterward (the post-money), and the investor owns their investment divided by that post-money. If you owned 100% and an investor buys 20%, you now own 80% of the same company — you were diluted 20%.
Across several rounds the effect compounds: your ownership is multiplied by (1 - investor share) at each round. Two rounds that each sell 20% leave you at 0.8 x 0.8 = 64%, not 60%.
Why the option pool hits founders hardest
Investors almost always require an option pool — shares reserved for future hires — and they usually insist it be created pre-money. That's a subtle but expensive detail: a pre-money pool comes out of the existing shareholders' slice, so founders and earlier investors absorb it while the incoming investor's percentage is protected. A 10% pre-money pool top-up on top of a round that sells 20% leaves you at 100% x 0.9 x 0.8 = 72%, not 80%. This calculator models the pre-money convention and shows the pool as its own slice on the cap table so you can see exactly what it cost you.
Valuing an employee grant
For employees the question is simpler but easy to get wrong. Your ownership is your grant shares divided by fully-diluted shares. Your gross payout at a sale is that percentage times the exit price; your net payout subtracts the cost to exercise your options (shares x strike price). A grant of 20,000 options out of 10,000,000 shares is 0.2%; at a $200M exit that's $400,000 gross, less a $30,000 exercise cost. Then reality intrudes: more funding rounds before the exit dilute you further, so a realistic estimate applies an expected future dilution first.
What this tool does not model
This is an illustrative planning tool, not tax or legal advice. It deliberately ignores several things that matter at a real exit: liquidation preferences (investors are often paid back first, which can shrink or wipe out common shareholders' proceeds in a low exit), AMT and other taxes on exercising and selling, vesting (you only own what has vested), and 409A valuations that set the strike price. SAFE conversion here is a simplified cap-only model. For a real decision, take these numbers to your company's cap-table records and a qualified advisor.