Equity Dilution

Think of a share as a small unit of ownership in a company. When your shares are unprotected their value is dependent on factors outside your control, such as how many other shares are being distributed to other people. Equity dilution is when these factors decimate the value of your ownership.

Even though Ron was a graduate of the Haas School of Business, he did not know what equity dilution was, so after a year of working at a Stanford student's startup, he lost all the control that he thought he would have.

Added by HalfLife3 over 8 years ago