What is Dilution?
The reduction in existing shareholders’ percentage ownership when new shares are issued.
Dilution is proportional: if you own 60% and the company sells 20% in a new round, you own 48%. Owning less of a bigger company can be worth more.
Example
Go deeper · Founder Playbook, Level 8How funding rounds work: valuation, dilution and term sheets →60% × (1 − 0.20) = 48%.