What is Dilution?
The drop in each owner's percentage when a company issues new shares. Investors track it because every new round shrinks their slice, even if the company as a whole becomes more valuable.
8 of 8 → 8 of 10 · 100% → 80%
In real work
After the seed round sold 20 percent of the company, dilution took Amara's stake in the tutoring startup from 10 percent to 8 percent.
In the illustration
The founder's row holds all 8 share blocks and the gauge reads 100%. The press stamps 2 new blocks onto an investor's row: the founder still holds 8, but that is now 8 of 10, and the gauge falls to 80%.
Model dilution in your deal notebook from the cap table I paste below: a new round sells 20 percent and adds a 10 percent option pool. Show each holder's stake before and after, with the arithmetic.
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