Dilution

Measured as

Measure Dilution with the same date, unit basis, and accounting or policy definitions used in the rest of your model.

Misused when

• Looking only at headline valuation instead of the full dilution package (pool, convertibles, etc.).
• Mixing different ownership bases in the same analysis.

Operator takeaway

• Dilution can come from new investment, option pool increases, and SAFE/note conversions.
• Always specify the basis (issued shares vs fully diluted).
• Tie Dilution to the same balance-sheet date, scenario, and decision memo you are using elsewhere in the model.
• Document which claims, costs, or adjustments your team includes before comparing numbers across forecasts, covenants, or valuation work.

Next decision

• Quantify the impact with Pre-money vs Post-money Valuation Calculator if you need to turn the definition into an operating assumption.
• Read Pre-money vs post-money valuation: formulas, ownership, and pitfalls if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.