Definition
The soul-crushing moment when a startup issues new shares, and existing shareholders watch their ownership percentage shrink faster than a wool sweater in a hot dryer. While you still own the same number of shares, you now own a smaller slice of the pie—assuming the company actually grows enough to justify the dilution. It's the price founders pay for other people's money, and the reason early employees cry into their vested options.
Example Usage
After three funding rounds, Sarah's 2% equity stake had been diluted to 0.3%, though the company assured her the pie was much bigger now.
Source: Common venture capital and startup terminology
Related Terms
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See “dilution” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.
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