There's no "right" dilution percentage for a round. The real question is whether the money buys a milestone big enough that your smaller stake ends up worth more than your bigger one is today. Founders who fixate on the percentage often win the negotiation and lose the outcome.
Every round costs the founders ownership. The ones worth taking buy something specific, and the founder can name it before signing.
The problem: percentage is the wrong scoreboard
Ownership percentage is easy to see, easy to compare, and easy to argue about. That's why founders anchor on it.
But the percentage doesn't pay you. Value does. Owning 70% of a company that stalls is a worse result than owning 45% of one that reaches the next level. Everybody agrees with that in theory. Then the term sheet shows up and the whole conversation becomes "can we get it from 22% to 19%?"
Clarity over complexity. There's one number that tells you whether a round is worth it, and most founders never calculate it.
The number that matters: your break-even value
Start with what your stake is worth on paper today. Then ask: after this round closes, what does the company need to be worth for my new stake to equal that?
A simple version. You own 60% before the round. After the close you own 48%. Your slice shrank by a fifth, so the company has to be worth 25% more than today's pre-money value for you to be back to even. Every dollar of value above that is what the round actually earned you.
Now the conversation changes. The question becomes "will this capital add more than 25% to what the company is worth?" If the milestone is real, that's an easy yes. If you can't say what the milestone is, no percentage makes the round a good one.
Why founders get surprised at close
The headline dilution is almost never the real dilution. I've watched founders model the check and then get surprised by three things.
The option pool. Investors often want a bigger pool, created before their money comes in. That comes out of the existing holders, which mostly means you.
Notes and SAFEs converting. Every convertible you signed to bridge a gap turns into shares at the round. Stack a few and the real dilution climbs fast.
The next round. This round isn't the last one. If you'll raise again in 18 months, your ownership gets cut again. Model both before you sign the first.
The reality is that none of this is hidden on purpose. It sits past the first page, and founders stop reading at the first page.
The move: build the cap table after close, then negotiate
Here's the order I'd push any founder to follow.
- Build today's cap table. Founders, employee pool, existing investors, everything else. It has to add to 100%.
- Model the round in full. Pre-money, new money, fees, convertibles, the pool target. Look at your ownership after close, not the headline.
- Find your break-even value. The company value needed for your stake to match what it's worth today.
- Tie it to the milestone. Write down what the money buys and how much value that milestone adds. If it clears break-even with room to spare, stop fighting over one or two points.
- Pick the one term to push on. Usually it's the pool size or the conversion terms, not the valuation.
When you get to the table, say it plainly: "We're comfortable with the dilution on the new money. The pool sizing is where we need to talk." That's a founder who's done the math, and investors respect it.
What to do this week
- Pull your current cap table and confirm it's accurate, including every note and SAFE.
- Calculate your ownership after the proposed close, with the pool and conversions included.
- Write your break-even value on a sticky note and keep it in front of you during every conversation about terms.
Feldman Dilution
Feldman Dilution walks you through five stages: your ownership today, the proposed round, a side-by-side of a smaller, target, and larger raise, future rounds and exits, and a one-page ownership brief. The number to watch is "value required to restore founder stake value." That's your break-even. It also flags the hidden dilution most founders miss, so you walk into the negotiation knowing which term actually matters.
Open the Feldman Dilution →Get the next lesson in your inbox
Short, practical lessons like this one for founders running $1M–$20M companies, plus every new free tool before anyone else.
If this is the call in front of you, let's talk it through.
A focused 30-minute conversation. No pitch. Just a direct discussion about the decision and whether I can help.
Book a call with Danny →
Danny Feldman is a 3× founder and the advisor behind Feldman Advisory. He founded and scaled Stellar to $100M in annual revenue across 15 states, raised $55M+ as a founder, and used AI to double revenue before exiting to private equity. Earlier, he recruited and trained 55,000+ sales reps at Cutco and grew a division from 1 to 58 locations. Operator to operator, he now helps founders of $1M–$20M companies get out of the middle of the business, build the leadership team, and raise capital. Book a 30-minute call →