ESOP & Equity Dilution Calculator
See exactly how a new ESOP pool or funding round dilutes your ownership — before vs after, in percentage points, with the full cap table.
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- Built by our CA · CS team
- Rules cited on the page
Enter your figures — the result on the right updates as you type.
Cap table — before vs after
| Shareholder | Shares before | % before | Shares after | % after |
|---|
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Disclaimer: Indicative model of simple share-count dilution on a fully-diluted basis. Real rounds involve pre/post-money valuation, option-pool timing, preference terms and anti-dilution clauses. Consult an advisor before acting.
What equity dilution really means
Dilution happens whenever a company issues new shares — for an ESOP pool or a funding round. Your share count stays the same, but the total pie grows, so your percentage of the company falls. This tool adds the new shares to the total, then recomputes everyone's ownership so you can see the hit in percentage points before you sign.
Worked example
Say the company has 10,00,000 shares and you hold 6,00,000 — that's a 60% stake. The board carves out a 1,50,000-share ESOP pool. Here's what happens to your ownership:
Key terms explained
Dilution
The drop in your ownership percentage when new shares are issued. Measured in percentage points — e.g. going from 60% to 52.17% is 7.83 points of dilution, not "7.83%".
ESOP pool
A block of shares (or options) reserved for employees. Creating or topping up the pool issues new shares, diluting existing holders — usually the founders bear this dilution before a round.
Pre & post-money
Pre-money is the company's value before new investment; post-money = pre-money + amount raised. An investor's stake = amount invested ÷ post-money valuation.
Anti-dilution
A protective clause that shields investors if the company later raises at a lower price (a down-round), by adjusting their conversion — it does not protect founders or employees.
Questions people ask
Short answers on ESOP / Equity Dilution Calculator. Tap a question to open it.
01What is dilution?
The reduction in your percentage ownership when a company issues new shares. Your number of shares stays the same but the total goes up, so your share of the company falls even though its value may rise.
02How is post-money ownership calculated?
Post-money ownership = your shares ÷ total shares after the new issue. In a round, new shares are issued at the agreed pre-money valuation, so investor stake = investment ÷ post-money valuation.
03How does an ESOP pool affect founders?
An ESOP pool created before a round comes out of the existing shareholders' stake, so founders bear the dilution. A pool created after the round dilutes everyone including the new investor. This is one of the most negotiated points in a term sheet.
04How big should an ESOP pool be?
Commonly 5% to 15% of the cap table, sized against the hiring plan for the next 18 to 24 months. Too large a pool dilutes founders unnecessarily; too small forces a top-up at the next round.
05How are ESOPs taxed in India?
Twice. At exercise the difference between fair market value and exercise price is a perquisite taxed at slab rates, and at sale the gain over that fair market value is a capital gain. Eligible DPIIT-recognised startups can defer the perquisite TDS.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.