Equity Dilution
Noun · Startup & VC
Definitions
The reduction in an existing shareholder's ownership percentage when new shares are issued. Dilution is normal in startup financing, but its impact depends on valuation, pool expansions, and investor rights.
In plain English: Losing some ownership percentage because more shares were created.
Example: "The founders accepted equity dilution because the round materially improved the company's odds of winning the market."