Startup Company Valuation and Dilution Calculator

Each time a company raises capital, management must determine how much equity to give up to obtain the needed cash.  If too much equity is sacrificed too early, founders can find themselves so diluted that it will be hard to raise capital without destroying their incentives.  Too many times I see founders focusing too narrowly on their first capital raise, without giving due regard for the dilution that will surely come when the company reaches the next point where it will need to raise capital.

To help my clients get a better feel for how their ownership shares will be diluted over multiple capital raises, I prepared an Excel spreadsheet that calculates pre-money value and dilution over five capital raises. The purpose of this spreadsheet is to help founders set the price of their early capital raises while considering the complete growth cycle of the company.

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The video below explains how to use the Valuation and Dilution Calculator, which you can DOWNLOAD HERE.

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Comments

  1. Frank Pierce says:

    This is very, very helpful. We are raising money right now. To be precise, meaning we separate the “friends & family” from a subsequent seed round, I need to add three more columns/rounds, e.g. F, G, H. Frank

  2. Roland Peralta says:

    Thank you so much for making this calculator available to us. It made the difference in truly understanding the process!!! Grateful to you all at Mackley!!!

  3. Tom McMurrain says:

    Very helpful – thank you – Tom

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