What are the stages of equity dilution?

Equity dilution usually occurs in the financing process of enterprises, especially in the case of multiple rounds of financing. The stages of equity dilution can be roughly divided into the following stages:

Primitive period

In the initial stage of a company, the founder usually takes part of the equity as the registered capital, and may set up a option pool to attract and retain talents.

Angel wheel financing

In the angel round financing stage, the enterprise may sell 10%-20% equity to angel investors to obtain start-up funds.

A round of financing

In the A-round financing stage, the enterprise may sell 20%-30% equity to venture capitalists to support the further expansion and development of the enterprise.

B round of financing

In the second round of financing, the enterprise may sell the equity of 10%- 15% to support the rapid growth and market expansion of the enterprise.

C round financing

In the C-round financing stage, the enterprise may sell 5%- 10% equity to support the further development of the enterprise and prepare for listing.

Initial public offering (IPO)

In the IPO stage, when an enterprise issues shares to the public, the original shareholders' rights and interests will be further diluted, but it also means that the enterprise can obtain a lot of funds and improve its brand awareness.

In the whole process, stock dilution not only affects the shareholding ratio of the original shareholders, but also involves the equity distribution of new investors and employees. In order to balance the interests of all parties, enterprises may adopt special equity design, such as a two-tier equity structure, to ensure the founder's control over the company.

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[4]:/Haima 1998/article/details/ 10 1532787