Angel investors
How can an angel model dilution across later rounds for a consumer product startup?
a consumer product startup: Model dilution as a change in ownership under explicit assumptions.
Model dilution as a change in ownership under explicit assumptions. Later issuance, option pools, convertibles, and participation can affect the result. A percentage is not a forecast of value, proceeds, or the terms of a future round.
Start with the decision
Start with a simplified cap table, show each assumed issuance, and label what the model excludes. Compare participation and nonparticipation only as educational scenarios. Use the actual documents and qualified counsel for a real cap-table analysis.
The illustrative scenario
This is an educational workbook. The company or fund and all numerical inputs below are fictional. They are not ADIN results, customer claims, market benchmarks, or a forecast.
The fictional company offers a paid learning app. Early signups followed a launch promotion, and the founder is testing whether users return without discounts. Marketing, support, and content costs vary across cohorts.
A download or free trial does not establish retention or willingness to pay. Separate acquisition cohorts, renewal behavior, refunds, and incentives before extrapolating growth.
A simplified priced-round and cash comparison
Assume a fictional priced equity round of $1,500,000.00 at a pre-money value of $6,000,000.00. A $15,000.00 check divided by the simplified post-money amount produces 0.200% ownership. If a later issuance reduces existing holders by an assumed 25%, that interest becomes 0.150% without participation.
The exercise omits option pools, convertibles, preferences, fees, side agreements, and other actual terms. It is not a SAFE conversion model or a recommendation to invest or preserve ownership. Actual cap-table and document analysis belongs with qualified advisers. A percentage of ownership does not specify eventual proceeds or protect against total loss.
The fictional company's $350,000.00 of cash divided by $50,000.00 of monthly use gives 7.0 months under a constant-use assumption. Compare continued paid use with the initial launch spike. A narrow engaged cohort can be more informative than a large blended signup total. Connect that simple quotient to dated obligations and milestones before drawing a conclusion about financing needs or progress.
| Item | Illustration |
|---|---|
| Assumed pre-money value / round size | $6,000,000.00 / $1,500,000.00 |
| Fictional investor check | $15,000.00 |
| Simplified initial ownership | 0.200% |
| Assumed later dilution | 25% |
| Ownership without later participation | 0.150% |
| Cash / constant monthly use | $350,000.00 / $50,000.00 |
Use this worksheet
Answer the questions with a source, date, owner, and next action. Mark an unknown as unknown. Use public or permissioned information and involve a qualified specialist when a question requires expertise beyond the team’s competence.
- What is the starting ownership?
- Which issuance is assumed?
- Does the holder participate?
- What instruments are omitted?
- Who checked the actual cap table?
Questions specific to this scenario
- Who renews without a discount?
- Which acquisition cohort is comparable?
- What happens after the promotion ends?
Inspect consented aggregate cohort data, paid renewals, acquisition spending, refunds, and changes in the product experience. Keep sponsored or incentivized usage visible.
A concrete next test
Compare a launch-promotion cohort with a later group using the same renewal and refund definitions. Ask what changed in price, acquisition channel, and product experience. Avoid attributing a blended retention change to the product before checking those differences.
Interpret the result
A dilution model helps explain mechanics and dependencies. It does not establish that maintaining ownership is desirable or affordable, and it should not disguise unknown future financing terms as facts.
Compare continued paid use with the initial launch spike. A narrow engaged cohort can be more informative than a large blended signup total.
Sources and method
These primary resources provide background for the concepts. The fictional scenario, calculations, and worksheet are ADIN educational examples; the sources do not report or validate those invented results. Reviewed October 11, 2026.