Crowdfunding - cost of dilution

Hello all, with the next round of crowdfunding not too far away, share dilution came to mind.
In previous rounds I recall an equation to calculate how much money one needed to put in to avoid their shares from becoming diluted due to the raise.
Does anyone recall this equation or have any ideas on this please?
Ta very muchly

1 Like

It depends on how many new shares are created.

If you want to keep the same percentage of shares in the company, you should buy an amount equal to the percentage you already own.

For example, if there are 400 total shares and you own 4, you own 1% of the company. If 100 new shares are created, you now own 0.8%. If you buy 1% of the 100 new shares (1), you will continue to own 1%.

Is this what you are asking?

2 Likes

Thanks for your reply - yes that makes sense. Will now need to calculate how much of FT I own thanks for your help!

1 Like

Out of interest why do you care about dilution?

2 Likes

I was surprised last time how little most people cared about dilution. I know it doesnâ€™t change the value of your investment, but as the value of the company goes up, each bit of dilution chips away at your original calculations. 10% here and 5% there adds up. But hey, I have a spreadsheet that updates everything as it happens, so it doesnâ€™t really matter.

3 Likes

Would be nice to maintain the value of the original investment in the company is all