Dilution
The reduction in your ownership percentage when new shares are issued.
Why it matters
Dilution is the price of capital and is not inherently bad. Owning 15% of a company worth $500M beats owning 60% of one worth $8M. What matters is whether each round buys enough progress to grow the value of your smaller slice.
A worked example
Start at 100%. A 19% seed, an 18% Series A and a 13% Series B leave you with 100% x 0.81 x 0.82 x 0.87 = 57.8% of what you began with, before any option pool refreshes.
What is typical
Recent medians run near 19% at seed, 18% at Series A and 13% at Series B, leaving median founder ownership around 56%, 36% and 23% after each.
Model your dilution across rounds →
Related terms
Pre-money valuation
What your company is agreed to be worth immediately before new investment goes in.
Read more →Option pool
Shares set aside to grant to future employees, usually expressed as a percentage of the fully diluted company.
Read more →Run your raise on this
VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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