down dilution

Definition

The reduction in ownership percentage when additional shares are issued, especially painful in a down round where new shares are issued at a lower price. Watching your equity stake shrink while your company's value simultaneously decreases.

Example Usage

The down round came with massive down dilution—founders went from owning 40% to 15% while the company's valuation halved.

Origin

Financial terminology combining 'down round' and 'dilution'

Fun Fact

Down dilution often triggers anti-dilution provisions for preferred shareholders, meaning founders and common stockholders eat most of the dilution while investors are partially protected.

Source: Venture capital and equity financing terminology

Related Terms

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Ramen Profitable

The stage at which a startup makes just enough revenue to cover the founders' basic living expenses, assuming those expenses are limited to instant noodles and shared housing. It's the lowest bar of financial success that still technically counts as success.

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vested

The magical moment when stock options or retirement contributions officially become yours to keep, transforming from corporate dangling carrot into actual ownership. It's the golden handcuffs' lock clicking shut, ensuring you'll think twice before rage-quitting. The startup world's version of 'you must be this loyal to ride this rocket ship.'

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investor

Someone who gives you money in exchange for a piece of your company, future profits, or the thrill of watching their capital evaporate. They're either your best friend or worst nightmare, depending on whether your quarterly numbers are trending upward. In startup land, they're the people whose calls you always take.

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Advanced

Equity Dilution

The process by which your ownership percentage shrinks with each funding round until you own approximately as much of your company as you own of the Pacific Ocean. It's like splitting a pizza with more and more people, except you baked the pizza and now you get one olive.

🚀 Startup / VC

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Bootstrapping

Building a company using nothing but your own savings, credit cards, and an alarming tolerance for ramen noodles. It's the startup equivalent of performing surgery on yourself -- theoretically possible, but everyone watching is deeply uncomfortable.

🚀 Startup / VC

Intermediate

soft circle

Verbal commitments from investors to participate in a round that aren't legally binding, giving founders a sense of momentum that may evaporate when term sheets arrive. It's Schrödinger's capital raise.

🚀 Startup / VC

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