Dilution
What is Dilution?
The reduction in your ownership percentage when a company issues new shares - to investors, employees, or others.
Dilution is what happens when the total number of shares grows but your share count doesn't: the pie gets bigger, your slice stays the same size, so you own a smaller percentage. Sources of dilution: new investor rounds, option pool expansions, SAFE/convertible note conversions, warrant exercises. Smart dilution - raising at a high valuation - increases the value of your stake even as the percentage shrinks. Bad dilution - raising at a low valuation or large pool top-ups - destroys value.