Angel investors
How can an angel model dilution across later rounds for an AI application startup?
an AI application 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 team sells an AI assistant to small support departments. A demonstration works on familiar examples, but the product is still testing performance on new customers' queues. Founder time currently covers many exceptions.
Separate model output from completed customer work. A software revenue claim needs a matching view of model usage, human delivery, customer support, and rework.
A simplified priced-round and cash comparison
Assume a fictional priced equity round of $3,000,000.00 at a pre-money value of $12,000,000.00. A $30,000.00 check divided by the simplified post-money amount produces 0.200% ownership. If a later issuance reduces existing holders by an assumed 22%, that interest becomes 0.156% 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 $600,000.00 of cash divided by $85,000.00 of monthly use gives 7.1 months under a constant-use assumption. Compare the promised workflow with the delivered workflow. The relevant question is whether adoption and delivery economics improve together. 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 | $12,000,000.00 / $3,000,000.00 |
| Fictional investor check | $30,000.00 |
| Simplified initial ownership | 0.200% |
| Assumed later dilution | 22% |
| Ownership without later participation | 0.156% |
| Cash / constant monthly use | $600,000.00 / $85,000.00 |
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 reviews failures?
- How much founder work supports each account?
- Which results hold on unseen examples?
Request a permissioned evaluation sample, customer usage cohorts, an exception log, and a cost model that includes human work. Keep actual results distinct from roadmap features.
A concrete next test
Observe a permissioned workflow where the assistant fails or needs founder intervention. Record the human time and what the customer sees. Compare that case with the demo so the diligence discussion addresses delivered work rather than only the best familiar example.
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 the promised workflow with the delivered workflow. The relevant question is whether adoption and delivery economics improve together.
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.