Dilution

Also called: dilute, diluted, diluting

When the company creates new shares, each existing owner's percentage gets smaller, even though the number of shares they hold stays the same.

For example: You own half of your company. The company creates new shares for an investor. You now own 40 percent, but of a company that has more money to work with.

Connects to 6

Equity Concept
Valuation Concept
Cap table Concept
Pro rata rights Concept
Option pool Concept
Non-dilutive funding Concept

This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.