A funding round is a financing event in which a company raises capital from investors under agreed terms. Start-ups may raise successive rounds through debt or equity; equity financing exchanges ownership for capital. section 12.3.2
Equity rounds issue new shares, so existing owners usually hold smaller percentages afterward. That dilution can still increase the value of their holdings if the capital grows the company’s valuation and value per share. section 12.3.2
Seed-round dilution
Two founders own 1,000,000 shares equally. An investor contributes $500,000 for 25% of the company, so the company issues 333,333 new shares. The founders retain their shares but collectively fall from 100% to 75% ownership. section 12.3.2
Listing 12.2 Calculating dilution
import pandas as pd
total_shares = 1_000_000 #1
founder_shares = 500_000 #1
funding_rounds = [
("Seed", 500_000, 25), #1
("Series A", 2_000_000, 20), #1
("Series B", 10_000_000, 15), #1
("Series C", 50_000_000, 10) #1
]
dilution_data = []
for round_name, investment, equity_given in funding_rounds:
new_shares = (total_shares *
(equity_given /
(100 - equity_given))) #2
total_shares += new_shares #2
founder_ownership = (founder_shares /
total_shares) * 100 #2
dilution_data.append([round_name,
investment,
int(total_shares),
round(founder_ownership, 2)]) #2
df = pd.DataFrame(dilution_data,
columns=["Round", "Investment ($)", "Total Shares",
"Founder Ownership (%)"])
df
A pandas model applies successive Seed, Series A, Series B, and Series C rounds to calculate new shares and track founder ownership. section 12.3.2
