# Dilution

Concept · [Fundraising and equity](https://ecosystem.samcarlton.com/fundraising)

Also called: dilute, diluted, diluting

When the company creates new [shares](https://ecosystem.samcarlton.com/equity), 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](https://ecosystem.samcarlton.com/equity) for an investor. You now own 40 percent, but of a company that has more money to work with.

## Connects to (6)

- [Equity](https://ecosystem.samcarlton.com/equity): Ownership in a company.
- [Valuation](https://ecosystem.samcarlton.com/valuation): What the company is agreed to be worth for the purpose of an investment.
- [Cap table](https://ecosystem.samcarlton.com/cap-table): Short for capitalization table.
- [Pro rata rights](https://ecosystem.samcarlton.com/pro-rata): An investor's right to buy enough shares in a later round to keep the same percentage of the company.
- [Option pool](https://ecosystem.samcarlton.com/option-pool): A block of shares a company sets aside to grant to future employees, advisors and contractors, usually as stock options.
- [Non-dilutive funding](https://ecosystem.samcarlton.com/non-dilutive-funding): Money a company receives without giving up any ownership.

> 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.

Map view: https://ecosystem.samcarlton.com/dilution