Free equity dilution calculator – how to split ownership fairly
Why does the equity split matter so much?
The equity split is a decisive factor for any startup or company with several shareholders. It determines how ownership is divided between founders and investors, and how future funding rounds affect existing stakes. A fair split is essential if you want a healthy working relationship between everyone involved over the long term.
A bad equity split leads to disputes, demotivates founders and can put off future investors. That is why it is critical to get the numbers right from day one – or to get professional advice. If you need support, nugrow is happy to help.
What is an equity split?
The term "equity split" describes how a company's ownership is divided among its shareholders. When a company is founded, an initial split is usually agreed based on contributions such as cash investment, work put in or know-how. Later investors or new shareholders can change those ratios, however, by contributing capital and taking shares in return.
A few basic aspects of the equity split:
- Initial equity split: how the founding team divides ownership of the company.
- Equity dilution: existing stakes being diluted by new investors.
- Vesting rules: if a founder leaves the company, what happens to their shares?
- Investor entry: how new investments affect the existing stakes.
Every equity split is different. If you are unsure what yours should look like, talk to nugrow for tailored advice.
How does an equity split work?
An equity split is normally calculated on the basis of fixed rules and agreements. These are the key factors that go into it:
1. Ownership ratios: how large is each shareholder's stake before the new funding round?
2. Investor stake: what percentage of the company does the new investor receive?
3. Dilution: by how much does each existing shareholder's percentage shrink?
4. Post-investment stakes: what does the new cap table look like after the investment?
Used properly, calculation tools make sure everyone involved is treated fairly. If you have questions or need a hand, nugrow can support you.
Equity split calculator – work out your stakes easily and for free
Our free equity split calculator lets you work out quickly and easily how an investment affects existing shareholdings. Simply enter the number of shareholders, their current stakes and the investor's share – and the calculator immediately shows you the new ownership split.
👉 Try our equity split calculator now:
Investment calculator
If you need a bespoke calculation or you are dealing with complex special cases, you can always turn to nugrow.
Special cases in an equity split – key scenarios & examples
Not every equity split is straightforward. There are plenty of special cases that call for individual solutions. Here are some common scenarios:
1. Dilution of a single shareholder only
Sometimes it is not the entire equity that is diluted, but only one shareholder's stake. This can happen when a founder sells additional shares or gives some up.
Example:
- Original stakes: founder A (50%), founder B (50%)
- Founder B hands 10% of their shares to a new investor
- New split: founder A (50%), founder B (40%), investor (10%)
If you want to make sure your cap table stays fair, contact nugrow for a professional calculation.
2. A funding round with several investors
Sometimes several investors come in at the same time, which makes the ownership split considerably more complex.
Example:
- Current split: founder A (40%), founder B (40%), investor C (20%)
- Two new investors come in with 10% each
- New split: founder A (34%), founder B (34%), investor C (17%), investor D (10%), investor E (10%)
The more investors are involved, the harder it becomes to keep the split fair. This is exactly where nugrow can advise you.
3. Vesting & share buybacks
Vesting means that a founder's shares are tied to how long they stay with the company. If a founder leaves early, their shares may be bought back or redistributed among the remaining shareholders.
Example:
- Founder A holds 20% of the shares under a four-year vesting plan.
- Founder A leaves the company after two years.
- Depending on the agreement, 50% of their shares go back to the company or to the other shareholders.
If you need a vesting plan, or want to know how to treat departing shareholders fairly, talk to nugrow.
Conclusion – why you should plan your equity split properly
A well-thought-out equity split is essential to a company's long-term success. It keeps things fair, keeps investors and founders motivated, and prevents disputes down the line. Our equity split calculator gives you a quick first assessment, but for special cases and complex funding rounds there is no substitute for individual advice.
🚀 Get advice from the experts at nugrow to find the right equity split for your company.