Understanding How Dilution Affects You at a Startup

English: Diagram of the typical financing cycl...

English: Diagram of the typical financing cycle for a startup company. (Photo credit: Wikipedia)

Understanding How Dilution Affects You at a Startup.

Over the years I have worked with many entrepreneurs and start-ups and I have found that the concept of dilution and how it affects their equity stake can often be quite confusing and easily overlooked. I thought it might be worthwhile posting this link as a primer and a refresher. Dilution rears it head every time you are raising another round of financing and its well worth understanding it because it will give you an insight of how your investors (both early stage and later stage investors) will be affected. Indeed how your own equity is going to change.

When I moved from the UK to the land of opportunity, this was an early lesson for me as I sought the next round of financing for my first start-up.

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About smudan

Coach to CEO's and Business Owners with an end game or transition in mind while simultaneously building the equity value of their enterprise and creating a better life/work balance.

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