Dilution Cap

Definition

A limit on how much an investor's ownership can be diluted by future funding rounds. Basically the investor saying 'screw everyone who comes after me.'

Example Usage

Our Series A investor negotiated a dilution cap, which meant our Series B raised at insane terms to respect their cap.

Origin

Venture capital contract terminology, 1990s+

Fun Fact

Dilution caps sound good for everyone until they make your math impossible.

Source: Venture capital term sheet terminology

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nail it then scale it

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