Founder guide · US-focused education
Priced Round Dilution: Dos and Don'ts for Founders
By RaisePlan · Updated
Educational information, not legal, tax, accounting or investment advice. US scope; rules and signed documents vary. Cited benchmarks are static reports, not allocation targets. Worked examples are synthetic, not market data.
This guide covers priced equity rounds, where investors buy newly issued shares at a set price per share. It uses common US term-sheet conventions. SAFEs and convertible notes are covered only as caveats.
Do: Get pre-money and post-money right
Post-money valuation = pre-money valuation + new money. The investor then owns new money ÷ post-money. That formula only holds under simple assumptions: all primary cash for new shares, no convertibles converting in the round, no secondary sales, and fees ignored. Under those assumptions, $2M raised at an $8M pre-money valuation gives a $10M post-money valuation and 20% investor ownership.
Do: Ask whether the option pool is counted in the pre-money
Term sheets often require the option pool to be a set percentage after the round, created before it. Those new pool shares then count in the pre-money valuation, so existing holders absorb the dilution.
Synthetic example (made up, figures rounded, same simple assumptions): 10,000,000 fully diluted shares before the round, with founders and others holding 9,500,000 and an existing pool of 500,000. The investor puts in $2M at $8M pre-money for 20%. - No pool top-up: the investor gets 2,500,000 shares at $0.80. Founders and others own 9.5M ÷ 12.5M = 76%. - Pool must be 10% after the round, created pre-money: founders and others must equal 70% of the total, so the total is about 13,571,429 shares. The pool gets about 857,143 new shares and the investor gets about 2,714,286 shares at about $0.737 each. Founders and others own 70%.
The headline valuation is the same in both cases, but the top-up costs existing holders about 6 percentage points. Negotiate the price per share, not just the valuation, and size the pool from a real hiring plan.
Don't: Compare percentages with different bases
Founder ownership, the employee pool, and per-round dilution are each measured against different things. Check whether each number is fully diluted and whether it is measured before or after the round.
Don't: Leave SAFEs and notes out of the math
SAFEs and convertible notes usually convert at a priced round and add dilution. How they convert depends on the exact terms: a valuation cap, a discount, or both, plus how the conversion price is calculated. Y Combinator publishes standard SAFE forms, including a post-money valuation cap version, but those are not the only terms in use. Model every instrument from its signed documents and have counsel review the conversion.
Do: Model it before you sign
Use actual share counts, the pool size, and every convertible instrument. Small differences compound over later rounds.
Benchmark box (latest verified; static reports, not targets)
- Per-round dilution, Q2 2026 (newest verified): Carta's Series A funding guide (published Oct 7, 2026), quoting Carta's Round Benchmarking Tool, gives Q2 2026 medians of 19.4% dilution at seed and 18.7% at Series A. Carta calls these "reference points, not targets." The tool page describes data on 20,000 equity rounds raised by US-based startups since 2021. Carta's exact definition of dilution isn't stated on the public pages.
- Per-round dilution, Q1 2026: Carta's State of Private Markets Q1 2026 (published May 29, 2026; data snapshot May 2026; equity rounds raised in USD by US-based companies on Carta) reports median dilution of about 19% at seed and 18% at Series A.
- Per-round dilution, 2022 to Q2 2026: Carta's Founder Ownership Report 2026: APAC & MEA (published Oct 29, 2026; snapshot August 2026) gives US comparison medians of 20.5% at seed and 20.3% at Series A over that period.
- Founder ownership: Carta's Founder Ownership Report 2026 reports the median founding team holds about 56% fully diluted after seed and 36% after Series A, based on rounds raised from 2021 through 2025.
- Newest: Carta's State of Private Markets: Q3 2026 (published Nov 5, 2026; snapshot Nov 1, 2026) says median dilution has kept falling, but its text doesn't give exact seed or Series A figures.
- Limitations: only companies on Carta, different time windows, the figures use different denominators, and every median comes from a different set of companies. Non-US results differ.
Try your own sample scenarios in the RaisePlan priced-round dilution demo.