Learn what dilution means and which ownership details to review in a proposed round.
Program rules, amounts, and dates can change. Check the linked official sources for the current cycle.
Define dilution
When a company issues additional equity, existing owners may hold a smaller percentage afterward. The result depends on the instrument, capitalization, and transaction terms.
Model the proposed financing
Review pre- and post-financing ownership, including options and convertible securities. Ask how the proposed amount and valuation affect each holder.
Review more than percentages
Voting, preferences, board rights, and future financing provisions can matter alongside ownership. Have qualified counsel review the documents.