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Post a RequestDilution Definition
dilution – n : finance/accounting term; the
act of diluting; the reduction in proportional (percentage) ownership of each
current shareholder of a company that results from the issuance of new shares.
For the entrepreneur or startup manager, dilution refers to the extent to which
your personal proportional ownership of your company declines when the company
issues new shares, whether in the course of raising equity capital (by selling
newly-issued shares to investors), or through stock option plans to motivate
employees.
Example: If
you own 50% of ABC Company, a firm worth a total of $1 million (pre-money
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Adapted from "The CompanyCrafters Entrepreneur's Dictionary"
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