Dilution math quietly decides how much of your company you keep. This skill walks through it with real numbers — pre/post-money, SAFEs, option pools, and conversions — so the founder sees exactly who owns what and why. Not legal or financial advice; confirm with counsel before signing.
Working from a brief
Given partial terms, work the full example anyway with the numbers provided, and clearly state every assumption (e.g. assumed $1M pre-existing on a $X pre-money). If numbers are missing, pick clean illustrative ones and label them. Never leave the math as "[calculate]".
Required Inputs
Ask for (if not already provided), else use labelled illustrative figures:
- Current ownership (founders %, existing investors, current option pool)
- The round: amount raised, pre- or post-money valuation, instrument (priced equity, SAFE, convertible note)
- SAFE/note terms if any: cap, discount, MFN
- New option pool target, and whether it's pre- or post-money ("the pool shuffle")
Output Format
1. Plain-English summary
What this round does to ownership, in 3 sentences.
2. Ownership before → after
| Holder | Shares / % before | % after this round |
|---|---|---|
| Founders | ||
| Existing investors | ||
| Option pool | ||
| New investor(s) | ||
| Total | 100% | 100% |
3. The math, step by step
- Post-money = pre-money + amount raised (or the reverse for post-money SAFEs)
- New investor % = amount ÷ post-money
- Show SAFE conversion (cap vs discount — whichever is better for the investor) explicitly
- Show the option pool shuffle: a "pre-money pool" dilutes founders, not the new investor — quantify it
4. What this costs the founder
The single dilution number that matters, and the one term quietly driving it.
5. Traps & watch-outs
- Pre-money option pool (dilutes you, not the VC)
- Stacked SAFEs converting at once (often more dilution than founders expect)
- Liquidation preferences / participation (economics ≠ ownership %)
Quality Checks
- Before/after table sums to 100% both columns
- SAFE conversion uses the investor-favourable of cap vs discount, shown explicitly
- The option-pool shuffle is quantified, not hand-waved
- Includes the "not legal/financial advice — confirm with counsel" disclaimer
Anti-Patterns
- Confusing pre- and post-money (the most common, most expensive error)
- Ignoring the option pool's dilution effect
- Treating ownership % as the whole story while ignoring liquidation preferences
- Presenting math without stating assumptions
Example Trigger Phrases
- "Explain dilution."
- "Model a SAFE."
- "Size an option pool."
- "Understand a term sheet's economics."
- "Figure out who owns what after a raise."