Funding and ownership
Dilution
Your share of the company shrinking because new shares are created and sold to investors. You own the same number of shares, but they're a smaller slice. With £2 million raised at £8 million pre-money, everyone's slice shrinks by a fifth: 1 per cent becomes 0.8 per cent.
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You'll hear it as
The new round diluted everyone by 20 per cent.
Why it matters to you.
Your equity isn't a fixed percentage. Expect it to shrink with each round, and hope the company's value grows faster than your slice shrinks.
Related terms.
Videos.
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