Venture Deals · glossary
The fall in a holder’s percentage when new shares are issued. By itself it is not a loss of value, because the holder keeps a smaller share of a bigger company. Chapter 7
Explained in Chapter 7, Pricing the Round: Pre-Money, Post-Money and the Option Pool, of Venture Deals.
Also explained in Shareholders' Agreements.
Everyone who held shares before the round keeps the same number of shares, but each now holds a smaller percentage. That loss of percentage is dilution, and by itself it is not a loss of value. The pre-money shares were worth €8,000,000 just before the round and just after it.Read Chapter 7, Pricing the Round: Pre-Money, Post-Money and the Option Pool →
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