Has anyone come across any dilution calculator to help work out how much someone would need to invest to keep the same slice of the company after more shares are issued?
Far too complicated for my mind!
Interesting idea, but the main issue is that you cannot know in advance how many new shares are going to be issued. Therefore, it is purely dependent on how many investors will subscribe. It also depends on what the share price on a fully diluted basis is going to be (which is yet to be announced).
However, after some analysis of past rounds I realised that you could roughly (i.e. without an absolute certainty) rely on the following formula -
Your Original Investment x Equity Offer [displayed on Crowdcube website] x (New Valuation [£43m] / Old Valuation [£36m]) - to identify how many more shares you need to acquire and retain the same ownership. That is assuming you have invested in R3 or R4 (I have not extended the spreadsheet prior to R3).
I am not entirely confident that all calculations are correct but they are close. You can download the sheet and amend it with your figures to see how many more shares you need based on your R3 and/or R4 investments. Only enter data into yellow fields (in row 12, you only need to input the sum invested, the formulas will do the rest; in column E we do not yet know what the figures are going to be).
Again, do not rely on it entirely, but I have checked with my numbers and they added up fine. Bear in mind you will only know how many extra shares you need to buy after the round is closed and total equity offer is known, which is why you will only rely on an estimate.
Let me know if it helps or if there are questions regarding the spreadsheet. Or if you spot an error
@Vlad, it seems some issue with the calculations as R4 share price is coming as 91p whereas it should be 84.32p.
@Vlad thanks for the Excel spreadsheet on the other thread. Really useful
In my line of work, you would be a god among mortals! We have only just started to realise the potential of programs like Excel as an organisation. I am seen as somewhat of an expert and my limit is VLOOKUP and INDEX MATCH. For Queen and country!
The price of £0.8432 is calculated on fully diluted basis, as if the funding has been completed. The price of £0.9194 is based on pre-funding capital using a simple formula
Pre-money valuation / Current number of shares
Thank you VM Vlad for this nifty tool!! I was surprised by the amount I have to invest in this round to avoid dilution. Does that mean the more funds raised in this round, the more dilution (albeit marginal) there is?
Yes, because the more is raised, the more equity is offered