### S-1 Teardown: Xometry

Xometry is among the first of this generation’s B2B marketplaces to go public and its S-1 is a unique chance to analyze the economics of a marketplace for on-demand manufacturing that has achieved public company scale.

Calculating equity dilution can get complicated, leaving some founders wondering how much of the company they will really own after the fund raise is all said and done. In this post, we’ve broken down the dilution calculation into a straightforward spreadsheet, such that any founder can populate four fields in this post-raise equity calculator and automatically see what their dilution will be for a given scenario.

For an example calculation, we start with a pre-raise equity value (pEV) of 1 or 100%, which represents the entirety of the founder(s) equity. Our second defined value is the Employee Option Pool Dilution (EOPD), which, for this calculation, we assign a value of .1 or 10% (this can vary depending on term sheets). For purposes of this calculation, we are assuming the option pool will be grossed up prior to the financing as this is industry standard for Seed and Series A rounds. We will table these value for now, but we will bring them back up later once we have calculated the Capital Raise Dilution (CRD).

Calculating CRD is fairly straightforward. We’re going to make some assumptions about your company’s valuation and round size. For this example, we assign your company an $8,000,000 pre-money valuation. If you intend to raise $2,000,000, for example, then your post-money valuation would be $10,000,000. This value is obtained by summing the pre-money valuation ($8,000,000) and the raise value ($2,000,000). CRD is then calculated by dividing the raise value ($2,000,000) by the post-money valuation ($10,000,000). Which, in this case, would yield a CRD of 20%.

**CRD = (Raise Value)/(Post-Money Valuation)**

**CRD = ($2,000,000)/($10,000,000)**

**CRD = 0.20 or 20%**

Now we have the three critical values we need to plug into our post-raise equity calculator to calculate dilution: (i) pEV, in this case 100; (ii) EOPD, in this case 10%; and (iii) CRD, in this case 20%. To calculate our total founder ownership factor (TFOF), we use the following equation:

**TFOF = (1-EOPD)(1-CRD)**

Plugging in our earlier values into this equation would yield:

**TFOF = (1-0.1)(1-0.2)**

**TFOF = (0.9)(0.8)**

**TFOF = 0.72 or 72%**

In this case, because our pEV was 100%, our final equity value is the same as our TFOF. If yours is not, simply multiply the TFOF by whatever value your initial equity is, and you should reach a satisfactory value.

**Post-Raise Equity Value = pEV*TFOF**

**Post-Raise Equity Value = 1*0.72**

**Post-Raise Equity Value = 0.72 or 72%**

We have embedded a post-raise equity calculator below that will allow you to fill out your own values to define what your own dilution will look like. You can also download this tool with sensitivity tables here: Download “Bowery Capital Dilution Calculator”

Now you can be sure of what your equity will look post-raise. Happy fundraising!

*If you liked “Post-Raise Equity Calculator Walk-Through” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. *

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