Founder dilution in a funding round is calculated from three figures: the pre-money valuation, the amount raised and the size of the option pool. The founders' stake after the round equals their stake before it, multiplied by the pre-money and divided by the post-money. A worked example in francs, built for illustration, follows a fictitious startup from seed to Series A.
This calculation is just one step on the path to raising funds in Switzerland, with its rounds and its players. This page deals with a single question: how much equity the founders give up, round after round, and why.
What is founder dilution?
Dilution is the decline in the share of the capital held by the founders. Each new round brings in new shareholders, and that share shrinks, as our guide to the seed funding round and Series A points out.
The founders keep their shares, but the company issues new ones for the investors. Dilution affects all existing shareholders: according to Wikipedia, each round dilutes the entrepreneur and the earlier investors.
A funding round is different from a partnership or a product launch. Only a funding round brings in equity in exchange for shares, and only a funding round dilutes the capital.
Which formula is used to calculate dilution?
Calculating a startup's dilution starts from the pre-money valuation of a startup, that is, the price agreed before the fresh money comes in. Five formulas are enough:
- post-money = pre-money + amount invested;
- new investor's stake = amount invested ÷ post-money;
- a shareholder's stake after the round = their stake before × pre-money ÷ post-money;
- price per share = pre-money ÷ number of shares before the round;
- new shares = amount invested ÷ price per share.
The number of shares is counted on a fully diluted basis. According to Wikipedia, all options and warrants issued are included in the pre-money calculation.
How much do founders give up at the seed stage?
Let us take a fictitious example. Two founders hold, in equal parts, the 70,000 shares of a Swiss public limited company (société anonyme). A business angel puts in 700,000 francs at a pre-money valuation of 2.8 million francs.
- Price per share: 2,800,000 ÷ 70,000 = 40 francs.
- New shares: 700,000 ÷ 40 = 17,500 shares.
- Post-money: 2.8 + 0.7 = 3.5 million francs, for 87,500 shares.
- Investor's stake: 0.7 ÷ 3.5 = 20%.
- Founders' stake: 100% × 2.8 ÷ 3.5 = 80%, i.e. 40% each.
Why does the option pool weigh on the founders?
In our example, the term sheet provides for an option pool, a reserve of shares set aside for future employees. On a fully diluted basis, these shares count in the price, even though no one has exercised them.
Let us keep the same round, with a pool of 10% of the final capital, created before the investor comes in. The total then reaches 100,000 shares: 70,000 for the founders, 10,000 for the pool, 20,000 for the investor.
- Price per share: 700,000 ÷ 20,000 = 35 francs.
- Pre-money: 80,000 shares × 35 = 2.8 million francs, the same headline figure.
- Founders' stake: 70%, no longer 80%.
The announced pre-money has not moved, but the pool comes out of the founders' pockets alone. Their shares are worth 2.45 million francs on paper, compared with 2.8 million without a pool. The gap of 350,000 francs corresponds to the value of the pool's 10,000 shares. If the pool is created after the round, the burden is shared: everyone loses one tenth of their stake.
| Fictitious example, seed round of 700,000 francs | No pool | Pool in the pre-money | Pool created after the round |
|---|---|---|---|
| Headline pre-money | 2.8 million | 2.8 million | 2.8 million |
| Price paid by the investor | 40 francs | 35 francs | 40 francs |
| Founders' stake | 80% | 70% | 72% |
| Investor's stake | 20% | 20% | 18% |
| Option pool | – | 10% | 10% |
How does dilution add up in a Series A?
Dilution is cumulative: each round once again reduces the stake of all existing shareholders. Let us go back to the case with a pool. Eighteen months later, a venture capital fund invests 3 million francs at a pre-money of 12 million.
- Price per share: 12,000,000 ÷ 100,000 = 120 francs.
- New shares: 3,000,000 ÷ 120 = 25,000 shares, for a total of 125,000.
- Founders' stake: 70% × 12 ÷ 15 = 56%.
| Fictitious example | Before the seed | After the seed | After the Series A | Variant: down-round Series A |
|---|---|---|---|---|
| Total number of shares | 70,000 | 100,000 | 125,000 | 250,000 |
| Price per share | – | 35 francs | 120 francs | 20 francs |
| Founders | 100% | 70% | 56% | 28% |
| Seed investor | – | 20% | 16% | 8% |
| Option pool | – | 10% | 8% | 4% |
| Series A investor | – | – | 20% | 60% |
| Paper value of the founders' stakes | – | 2.45 million | 8.4 million | 1.4 million |
In two rounds, the founders have given up 44% of the capital. Yet their stake is worth 8.4 million francs on paper, compared with 2.45 million after the seed. This is an up round: according to the Wall Street Journal definition cited by Wikipedia, the price per share exceeds that of the previous round, here 120 francs versus 35.
What difference does a down round make?
A down round takes place at a price per share lower than that of the previous round. In the variant shown in the table, the same fund puts in 3 million at a pre-money of only 2 million.
The price falls to 20 francs, and the company issues 150,000 new shares. The fund takes 60% of the capital, and the founders drop to 28%. Their stake is now worth only 1.4 million francs on paper. According to Wikipedia, such rounds increase dilution, can damage reputation and raise the cost of capital. They were common in 2000–2001 and during the financial crisis of 2008.
Can a shareholder limit their dilution?
Yes, by reinvesting in each round in proportion to their stake. In the up-round Series A, the seed investor keeps its 20% if it buys 5,000 of the 25,000 new shares. That requires 600,000 francs.
For the founders, the bar is higher. Keeping 70% would require buying 17,500 new shares, i.e. 2.1 million francs.
A dated example: in Nouscom's Series D, closed in October 2026 for 135 million dollars, all existing investors followed on. The press release gives neither their stake nor the valuation: it is impossible to deduce their dilution from it.
Where can you find a model capitalisation table in Switzerland?
The Swiss Private Equity & Corporate Finance Association (SECA) publishes, free of charge, two sets of model documentation for funding rounds of Swiss startups. Each includes a capitalisation table, or cap table, alongside the term sheet and the shareholders' agreement.
- "Light" version: rounds of 0.5 to 5 million francs, for business angels and comparable investors.
- "Large" version: rounds of 5 to 20 million francs, for institutional or international investors.
The negotiated terms remain in the round's documents, such as the term sheet clauses. Public announcements say little. Zurich-based Enact Intelligence announced on 22 October 2026 a pre-seed round of 30 million dollars, with neither the valuation nor the stake given up published. Other cases are gathered in our section on startup funding rounds.
Key figures
- 80%: founders' stake after a seed round of 700,000 francs at a pre-money of 2.8 million (fictitious example).
- 70%: the same stake when a 10% pool is included in the pre-money (fictitious example).
- 56%: founders' stake after a Series A of 3 million at a pre-money of 12 million (fictitious example).
- 0.5 to 5 million francs: rounds targeted by SECA's "light" model documentation; 5 to 20 million for the "large" version (SECA).
- 135 million dollars: Nouscom's Series D, with no valuation published (Startupticker.ch, October 2026).
What we do not know yet
- Typical dilution levels per round in Switzerland: none of our sources quantifies them. The Swiss Venture Capital Report lists the known rounds, but its PDF reports are not among our sources.
- The usual size of an option pool in Swiss rounds: our sources do not give it.
- How anti-dilution protection works in a term sheet: none of our sources describes it.
- The stake given up by the founders of Nouscom and Enact Intelligence: it has not been published.
A smaller stake can be worth more, as long as the price per share rises. This is only a paper value, not a promise of returns.
