Cap Table & Equity Dilution Calculator

What is a Cap Table?

A capitalization table (cap table) is a document that shows who owns what percentage of your company. It tracks all shareholders — founders, co-founders, investors, ESOP holders, and advisors. For Indian startups, maintaining an accurate cap table from day one is not just good practice — it is essential for fundraising, compliance with the Companies Act, and MCA filings.

Every time you raise a funding round, issue new shares, or grant ESOPs, your cap table changes. Understanding how these changes affect your ownership is critical for making informed decisions about fundraising.

How Equity Dilution Works

When you raise external funding, you are essentially creating new shares and selling them to investors. This increases the total number of shares outstanding, which reduces (dilutes) the percentage ownership of existing shareholders.

Indian Fundraising Example

Amit and Sneha co-founded a fintech startup in Mumbai. Together, they own 100% of the company, split 60-40. An angel investor offers ₹1 crore at a pre-money valuation of ₹4 crore.

• Post-money valuation: ₹4 crore + ₹1 crore = ₹5 crore
• Investor ownership: ₹1 crore ÷ ₹5 crore = 20%
• Amit's new ownership: 60% × 0.80 = 48%
• Sneha's new ownership: 40% × 0.80 = 32%
• Total dilution per founder: 20% of their original stake

While both founders now own less in percentage terms, their shares are now valued at the post-money valuation. Amit's 48% of a ₹5 crore company is worth ₹2.4 crore — more than his 60% of the pre-money ₹4 crore valuation (₹2.4 crore). As the company grows, this gap widens in their favor.

Dilution Across Multiple Rounds

Indian startups typically go through several funding rounds: Pre-seed → Seed → Series A → Series B and beyond. Each round compounds dilution. Here is a realistic scenario:

• Pre-seed (Angel): Give away 10–15% → Founder retains 85–90%
• Seed (₹50L–₹2Cr): Give away 15–20% → Founder retains ~70%
• ESOP pool: Set aside 10% → Founder retains ~63%
• Series A (₹5–15Cr): Give away 20–25% → Founder retains ~47–50%

By Series A, a solo founder often holds 45–55% of the company. With a co-founder, individual stakes may be 25–35%. This is normal and expected in the Indian VC ecosystem.

Key Terms Every Indian Founder Should Know

1. Pre-money valuation: Your company's value before investment.
2. Post-money valuation: Pre-money + investment amount.
3. Liquidation preference: Investors get paid first during exit — common in Indian term sheets.
4. Anti-dilution clause: Protects investors if future rounds happen at a lower valuation (down round).
5. ESOP pool: Shares reserved for employees, typically 10–15% in Indian startups.
6. Vesting schedule: Standard 4-year vesting with 1-year cliff for both founders and employees in India.

Tips for Managing Dilution

• Raise only what you need — overfunding leads to unnecessary dilution.
• Increase your valuation by showing traction before each round.
• Consider convertible notes or SAFEs for early rounds — they defer valuation discussions.
• Plan your ESOP pool strategically — negotiate with investors on whether it comes from pre or post-money.
• Use this calculator to model different scenarios before taking meetings with investors.