1. What is Dilution Percentage?

The dilution percentage represents the proportion of diluted shares relative to the original shares in equity or investment contexts. It helps investors understand how much their ownership stake has been reduced after new shares are issued.

2. How Does the Calculator Work?

The calculator uses the dilution percentage formula:

Where:

• \( V_{diluted} \) — Diluted volume (units)
• \( V_{original} \) — Original volume (units)

Explanation: This formula calculates the percentage of shares after dilution compared to the original share count, helping investors assess ownership changes.

3. Importance of Dilution Calculation

Details: Calculating dilution percentage is crucial for investors to understand how new share issuances affect their ownership percentage and voting power in a company.

4. Using the Calculator

Tips: Enter both diluted volume and original volume in consistent units. Both values must be positive numbers greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What does dilution percentage indicate?
A: It shows how much an existing shareholder's ownership percentage decreases when new shares are issued.

Q2: When is share dilution calculation important?
A: During fundraising rounds, employee stock option plans, convertible note conversions, or any corporate action that increases total shares outstanding.

Q3: What's considered significant dilution?
A: Typically, dilution above 10-20% per round is considered significant, though this varies by industry and investment stage.

Q4: Can dilution be positive for shareholders?
A: Yes, if the capital raised through dilution is used effectively to grow the company, increasing the overall value despite the reduced percentage ownership.

Q5: How can investors protect against excessive dilution?
A: Through anti-dilution provisions, pre-emptive rights, or participating in follow-on investment rounds to maintain their ownership percentage.