Dilution
A reduction in a holder’s ownership percentage when the share base increases without a proportionate increase in that holder’s shares. Percentage dilution does not necessarily mean a loss of economic value.
Dilution in round numbers
Hypothetical: a holder owns 100 of 1,000 shares with the same rights, or 10%. The company issues 200 additional shares on the same basis and the holder does not participate. The holder then owns 100 of 1,200 shares, or 8.333%, about 8.3%.
Scroll horizontally to read all columns.
| Measure | Before | After |
|---|---|---|
| Holder shares | 100 | 100 |
| Total shares | 1,000 | 1,200 |
| Ownership | 10% | 100 ÷ 1,200 ≈ 8.3% |
Terms Related to Dilution
Pre-money / post-money · Cap table · Down round · All of the glossary