What does this round really cost you?

Illustrative figures. A company raising ₹15 crore at a ₹45 crore pre-money valuation, so ₹60 crore post-money and 25% for the investor. Founders hold 78% today, and there is an existing pool of 8%. The investor asks for a 15% pool after closing.

Two percentage points of a ₹60 crore company is about ₹1.2 crore of value, transferred from the founders to the new investor by a choice of words in a term sheet. It costs nothing to ask for the post-money treatment, or to split the difference by agreeing a smaller pool.

The second thing worth noticing is the pool size itself. Every extra percentage point of pool is paid for by whoever is being diluted. A 15% pool that the company will not use for three years is expensive certainty. Sizing the pool to an actual hiring plan is the strongest argument a founder can bring to this conversation.

This is the part that surprises founders most. A pre-money pool doesn't just dilute you. It lowers the valuation you actually received.

Continuing the illustrative example: the headline is a ₹45 crore pre-money valuation on a ₹60 crore post-money company. But with the pool created pre-money, everyone who owned the company before the round, founders, angels and the existing pool together, ends up with about 65% of it. At a ₹60 crore post-money valuation, that stake is worth about ₹39 crore.

So the effective pre-money valuation is closer to ₹39 crore than ₹45 crore. If the same pool were created post-money, existing holders would keep about 68%, worth roughly ₹41 crore. The difference is real money, and it never appears as a valuation number in any document.

The investor's argument is straightforward and not unreasonable. The company will need to hire senior people to deliver the plan the investment is funding. Those hires are part of the cost of the plan, and the plan was priced into the valuation. So the pool that funds them should come out of the value that existed before the money.

Three responses tend to move the conversation, and none of them is combative.

• ·Size it from the plan. If your hiring plan needs 9%, ask why the pool is 15%, and offer the arithmetic. The gap between those two numbers is worth around ₹3.6 crore at a ₹60 crore post-money valuation.
• ·Split it. Some of the pool pre-money, the rest post-money, or a smaller pool now with an agreed top-up at the next round if hiring runs ahead of plan.
• ·Price it. If the pool must be pre-money and large, that is effectively a lower valuation, and the valuation should move to reflect it. Investors understand this argument, because it is the same one they are making in reverse.

What rarely works is arguing about the principle without numbers. What usually works is a founder who has done the arithmetic and can show what the pool costs and what the hiring plan needs.

Founders often think about dilution one round at a time. The number that matters is where ownership lands after all the rounds a company is likely to raise, and each round's pool top-up stacks on the last.

An illustrative path: founders at 78% before a seed round, diluted to about 51% after a round with a 15% pool created pre-money, then to the high thirties after a Series A with another pool top-up, and lower again at Series B. Nothing unusual has happened in that path. It is simply what three rounds of equity funding and three pool refreshes do.

That's not an argument against raising. It's an argument for knowing the destination before the first step, and for treating each pool top-up as a real decision. Model the full path once, with your likely round sizes and valuations, and keep it updated. It takes an afternoon and changes how the conversations feel.

Ownership percentages are only half of the decision. A founder holding 60% of a company that can't hire the people it needs is worse off than one holding 50% of a company that can.

Options are how early-stage companies compete for senior people against larger employers who pay more in cash. Underfunding the pool to protect a percentage usually shows up a year later as a role you couldn't fill or a key person who left for a company that offered equity.

So the aim isn't the smallest possible pool. It's a pool sized to what you will actually grant, created in a way that shares the cost fairly, and explained well enough to the people receiving grants that it does the job it exists for.

• ·Liquidation preferences, participation and any other economic terms, which change what each shareholder receives at exit regardless of percentages.
• ·Convertible notes or SAFEs converting in the round, which take shares from the same pool of dilution and need their own arithmetic.
• ·Anti-dilution protection, which adjusts an earlier investor's shares if a later round is priced lower.
• ·Different share classes and their rights, including compulsorily convertible preference shares, which are how most Indian venture rounds are structured.
• ·Vesting: an unvested grant is not yet ownership, but it sits in the pool.
• ·Tax. In India, employees are generally taxed when options are exercised and again on sale, with specific rules and deferrals for some recognised startups. That is a question for a CA, and it affects whether a grant feels valuable to the person receiving it.

The calculator is ordinary equity arithmetic on one round. Your lawyer reads the documents; this shows you the shape of what they're describing.