Dilution

The drop in your ownership percentage when the company issues new shares, usually to raise money or grant employee options. You own the same number of shares, but they are now a smaller slice of a bigger pie.

Why it matters

Every round dilutes you, and that is fine if the pie grows faster than your slice shrinks. Understanding it stops you from optimising for ownership percentage over the value of what you own.

For example

A founder owns 50 percent, then the company raises a round that issues 20 percent new shares, so the founder's stake falls to 40 percent even though their share count is unchanged.

Go deeper

Carta: The Actual, Real Dilution from Series A, B, C and D Rounds SaaStr · article This is the cleanest statement of the per-round rule of thumb backed by Carta's data across 1,200+ rounds: roughly 20 percent at seed, 20 percent at Series A, 15 percent at Series B, then 10 to 15 percent. Lemkin's blunt closing point (that dilution adds up and there are real benefits to being efficient instead of chasing every round) is exactly our stance. Do the arithmetic on those numbers and two founders splitting the company are already near the single digits by Series B if every round runs hot, which is why you model forward before you sign. Open saastr.com →

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