Practical guide
How equity dilution works when new shares are issued
Calculate post-issue ownership and distinguish percentage-point loss from relative dilution with a share-count example.
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How do new shares dilute ownership?
If your share count stays fixed while the total share count grows, your percentage ownership falls. This calculator multiplies current ownership by existing shares divided by total shares after the issue.
Calculate a simple share issue
Assume an illustrative company has 10 million existing shares. You own 25%, or 2.5 million shares. It issues 2 million new shares to someone else. Your post-issue ownership is 2.5 million ÷ 12 million = 20.8333%.
The tool’s secondary result is the difference between old and new ownership: 4.1667 percentage points. Relative dilution is a different calculation: 4.1667 ÷ 25 = 16.6667% of your former ownership percentage.
Your original 2.5 million shares did not disappear. The denominator increased. This distinction helps explain why a lower percentage does not by itself establish a lower monetary value; the calculator does not value the company or the share rights.
Define the share basis
Use a consistent capitalization basis for existing and new shares. If your reported ownership already uses a fully diluted count, mixing it with an issued-shares-only denominator produces inconsistent results.
This simple tool excludes options, convertibles, and different share rights. For a real financing, start from the capitalization table and signed documents. A SAFE conversion or option-pool change can add shares beyond the new-money issue in this example.
Dilution questions
Does issuing 20% more shares reduce my percentage by 20%?
No. In this example, new shares equal 20% of the old count, but the relative dilution is 2 ÷ 12 = 16.6667% because the denominator after the issue is larger.
Can I use the result to value my stake?
Not on its own. Ownership percentage does not model liquidation preferences, exercise costs, debt, or liquidity. The article’s arithmetic is an illustrative equal-share count model, not a legal interpretation of a financing instrument. Review the actual capitalization terms before applying it.
Use the equity dilution calculator to reproduce the scenario with your own inputs.