Your ownership percentage isn't fixed the moment you're granted options
A grant of, say, 10,000 shares sounds like a fixed number, and it is — the share count itself doesn't change. What changes is the denominator: every time the company raises a new funding round, it issues new shares to investors, which increases the total share count without changing yours. Your 10,000 shares represent a shrinking slice of a growing pie. This is dilution, and it's not a bug or a sign of mismanagement — it's the normal mechanism by which startups raise capital, and it applies proportionally to every existing shareholder, founders included.
This tool models that shrinkage explicitly rather than showing you a static ownership percentage frozen at grant time, which is exactly why the exit-value inputs matter as much as the grant details themselves.
How dilution compounds across multiple rounds
Dilution multiplies, it doesn't add. If you own 1% today and the company raises three more rounds, each diluting existing shareholders by 20%, your final ownership isn't 1% minus three lots of 20 percentage points — it's 1% multiplied by 0.8 three times in a row: 1% × 0.8 × 0.8 × 0.8, which works out to 0.512%. Each round's dilution applies to whatever you own at that point, not to your original grant, which is why successive rounds compound rather than simply subtract.
Options vs. RSUs — a structural difference, not just a naming one
| Property | Stock options | RSUs |
|---|---|---|
| Cost to acquire shares | You pay the strike price | Free — granted at no cost |
| Value if share price falls below grant value | Can be worthless (underwater) | Still worth the current share value |
| When value is realized | At exercise, then sale | At vesting |
| Upside structure | Only profit above the strike price | Full share value from day one |
Modeling your equity
Enter your option grant: number of shares and strike (exercise) price.
Enter the company's current fully-diluted share count and latest 409A valuation.
Set an expected exit valuation and any additional dilution from future funding rounds.
Read your projected proceeds, ROI, and effective ownership at exit.
Why the strike price is fixed forever, even as the company's value changes
The strike price — also called the exercise price — is set once, at grant time, based on the company's 409A valuation at that moment, and it never changes afterward regardless of how the company's value moves. This is exactly what makes options valuable when a company grows: if the strike price is locked at an early, lower valuation and the company's share value rises substantially by exit, you profit on the entire gap between that fixed strike price and the eventual exit value per share. It's also what makes options risky: if the company's value falls below your strike price, exercising would mean paying more per share than the shares are currently worth.
> When your options go underwater
If the exit value per share ends up below your strike price, your options are described as underwater — exercising them would mean paying more than the shares are worth, a guaranteed loss. In that situation, the rational move is simply not to exercise; the options expire worthless rather than costing you anything beyond the opportunity they represented. Most employee stock option grants carry a 10-year expiration window, so an underwater option isn't necessarily gone forever if there's still time left before expiration and a real chance the company's valuation recovers.
Why the number shown is gross, not what actually lands in your bank account
This tool shows gross proceeds — exit value minus the strike cost you'd pay to exercise — which is a meaningful figure but not your final take-home amount. Actual after-tax proceeds depend heavily on your specific grant type (ISO, NSO, or RSU), how long you've held the shares, and your tax jurisdiction, and in practice taxes commonly consume somewhere in the 20–50% range of the gain. Because this variance is genuinely significant and highly personal, treat the gross figure as a useful planning number, not a final answer, and consult a tax advisor before making any actual exercise decision.
Common mistakes
Treating your grant's ownership percentage as fixed rather than modeling realistic future dilution from expected funding rounds.
Confusing gross proceeds with take-home pay — taxes can meaningfully shrink the actual amount you receive, often by a large fraction of the gain.
Assuming options and RSUs behave the same way — options require paying a strike price and can go underwater; RSUs are granted free and retain value as long as the share price is above zero.
Forgetting the 10-year expiration window on most employee options and letting a recoverable underwater grant lapse unnecessarily.
Real use cases
Estimating the realistic value of a job offer's equity component before accepting a startup role.
Modeling how additional funding rounds might dilute your current ownership before an anticipated exit.
Deciding whether to exercise options ahead of a company event, factoring in strike cost against projected exit value.
Comparing equity offers across companies with different strike prices, share counts, and expected valuations.
Frequently asked questions
Q: What is the strike price?
A: Also called the exercise price — the per-share price you pay to convert options into shares. It's set by the company's 409A valuation at grant time and doesn't change.
Q: What's the difference between options and RSUs?
A: Options give you the right to buy shares at the strike price — you only profit if the share value rises above it. RSUs are granted at no cost and are worth the full share value at vesting.
Q: How does future dilution affect my payout?
A: Each new funding round issues new shares, diluting everyone proportionally. If you own 1% today and the company raises 3 more rounds, each diluting 20%, your final ownership is 1% × 0.8 × 0.8 × 0.8, or 0.512%.
Q: Does this account for taxes or exercise costs?
A: This tool shows gross proceeds — exit value minus strike cost. Actual taxes depend on your grant type (ISO/NSO/RSU), holding period, and jurisdiction, often 20–50% of the gain. Consult a tax advisor before exercising.
Q: What if the exit value is below my strike?
A: Your options are 'underwater' — exercising would lose money. You'd simply not exercise, and the options expire worthless. Most employee options have a 10-year expiration window.
Q: Are my equity details uploaded?
A: No. The math runs 100% in your browser. Refresh to clear — your grant details are sensitive, so treat them accordingly.
Model your equity now
Try the Startup Equity Calculator. Want to understand the full ownership structure behind the dilution? Check the Cap Table Calculator and Company Valuation Calculator. Modeling a public stock trade instead? See the Stock Profit Calculator.
