How ownership dilution is decided?



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While raising money from investors how 'ownership dilution' is decided?

2 Answer(s)


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Dilution is based supply and demand. There is no direct science for this, its more an art.

Dilution depends on the following factors -
1) Company's financial performance
2) Market size
3) Competition
4) Customer Satisfaction
5) Team etc

The better the above 5 characteristics the lower the company has to dilute. If these 5 characteristics are not very interesting then company will have to dilute more.

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I also wrote a blog post based on your question - please check it here - http://www.dezyre.com/article/how-much-equity-to-dilute-to-investors/23