Fundraising
Calculate dilution from a pre-money pool increase
Compare a priced round with and without a pre-money unallocated-pool target using a worked capitalization example.
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Define the round and the pool target
Assume 7,000,000 existing shares, no options or other awards, no available pool, no convertibles, and no anti-dilution adjustments. The company raises $2,000,000 at an $8,000,000 pre-money valuation.
Compare two cases: no pool increase, and an increase included in the pre-money capitalization so that the unallocated pool equals 10% of the post-round fully diluted total. In Cap Table, the round’s pool percentage targets the unallocated pool after financing, not all shares ever reserved or granted under a plan.
Calculate the round without a pool increase
Price per share is $8,000,000 ÷ 7,000,000, approximately $1.142857. The $2,000,000 investment buys 1,750,000 shares. After financing, 8,750,000 shares are represented.
Existing holders own 7,000,000 ÷ 8,750,000 = 80%. The new investor owns 20%. This example has no pool row.
Include the pool before pricing the investment
Adding 1,000,000 unallocated shares gives a pre-money denominator of 8,000,000. The $8,000,000 pre-money valuation then implies $1 per share. The investor buys 2,000,000 shares, giving a 10,000,000-share fully diluted total.
| Group | Shares | Ownership |
|---|---|---|
| Existing holders | 7,000,000 | 70% |
| New investor | 2,000,000 | 20% |
| Unallocated pool | 1,000,000 | 10% |
| Total | 10,000,000 | 100% |
The investor remains at 20% in these two simplified cases. The existing holders move from 80% without the pool increase to 70% with it. That is a difference of 10 percentage points, or 12.5% relative to their 80% ownership in the no-increase case.
Apply the target to the actual company
An existing unallocated reserve reduces the additional shares needed. Already granted awards are counted separately from unallocated capacity. In the app, a lower target does not automatically shrink a larger existing reserve; a reserve reduction is a separate recorded action.
Convertibles can change the capitalization used in pricing. Y Combinator’s SAFE conversion explanation, for example, distinguishes existing pool capacity from the pool increase associated with a financing. Confirm the terms of each actual instrument rather than applying the simple example to every round.
Use the hiring forecast to justify a proposed share requirement, then review the full round model and destination plan. A model does not adopt the reserve increase. The closing workflow records the reviewed change.