Dilution
Also called: getting diluted
In one line
The shrinking of your ownership percentage when the company issues new shares, typically in a fundraising round.
In plain English
Every time the company raises money it prints new shares, so your slice becomes a smaller fraction of a bigger pie. Your share count stays the same; your percentage drops.
If you were explaining it to a 5-year-old
You own 1 of 10 cookies — a tenth. The baker makes 10 more cookies for new friends. You still hold your 1 cookie, but now it's 1 of 20.
Why it matters when you sell
Dilution across future rounds means your percentage today isn't your percentage at exit. It affects what your stake will really be worth when you can sell.
Related terms
Put it to use
When you're ready to go deeper, there's an optional Equity Toolkit and Report.
Sources
A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.
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