What dilution actually costs a founder
Why the percentage matters less than the value of the slice, and how four normal rounds take a founder from 100% to under 20%.
8 min readUpdated
6 guides
Ownership and control are separate things, and conflating them is how founders end up with a large stake in a company they no longer decide anything about. The cap table records who owns what. The governance documents — board composition, protective provisions, voting agreements — record who decides. Rounds change both, usually at the same time, and usually in ways that are only obvious in retrospect.
These guides cover how a cap table is actually read, what employee equity is worth and when, how dilution accumulates across rounds, how founders take money off the table before an exit, and what obligations come with having outside shareholders. The practical goal is that no term in your own documents should ever surprise you.
Why the percentage matters less than the value of the slice, and how four normal rounds take a founder from 100% to under 20%.
What every column in a capitalisation table means, how the fully diluted view differs, and how to build one that survives diligence.
How option grants work from grant to exercise, what a strike price is, and the exercise deadline that costs departing employees their equity.
How board composition evolves round by round, what protective provisions actually block, and how founders lose control while still owning the most shares.
Taking money off the table before an exit: when investors allow it, how much is acceptable, and what it signals.
The monthly report that keeps a board useful, how to handle bad news, and why reporting discipline changes your next round.