Equity Dilution Mechanics
Quote from Ndubuisi Ekekwe on April 22, 2023, 3:54 PMI made this video for Tekedia Startup Masterclass to explain Equity Dilution for some of our learners. The Excel sheet used has been uploaded in the course board
https://youtu.be/HPA70wCqQIE
Equity dilution happens when a company issues new shares of stock, which reduces the percentage ownership of existing shareholders.
This can occur when a company raises funds through a new investment round or issues stock options to employees.For example, let's say a company has 1,000 shares of stock outstanding, and you own 100 of those shares, or 10%.
If the company issues 500 new shares to raise additional funds, the total number of shares outstanding increases to 1,500. Your 100 shares still represent the same number of actual shares, but they now only represent 6.67% of the total shares outstanding.
I made this video for Tekedia Startup Masterclass to explain Equity Dilution for some of our learners. The Excel sheet used has been uploaded in the course board
Equity dilution happens when a company issues new shares of stock, which reduces the percentage ownership of existing shareholders.
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This can occur when a company raises funds through a new investment round or issues stock options to employees.For example, let's say a company has 1,000 shares of stock outstanding, and you own 100 of those shares, or 10%.
If the company issues 500 new shares to raise additional funds, the total number of shares outstanding increases to 1,500. Your 100 shares still represent the same number of actual shares, but they now only represent 6.67% of the total shares outstanding.
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