What is dilution and how do I read the preview?

Short answer

Dilution = an existing shareholder's ownership % goes down because the company issued new shares to someone else. The number of their shares is unchanged, but the total has grown.

Example

Before round:

• Alex: 8,000 ordinary (40%)
• Sam: 8,000 ordinary (40%)
• Marina: 4,000 ordinary (20%)
• Total: 20,000

A Series A issues 5,000 new ordinary to a new investor:

After round:

• Alex: 8,000 (32%) — diluted by 8 percentage points
• Sam: 8,000 (32%) — same
• Marina: 4,000 (16%) — same proportion
• New investor: 5,000 (20%)
• Total: 25,000

Everyone existing was diluted by the same proportion (20%) but the percentage points depend on how big their stake was to start.

What the dilution preview shows

When you click Preview dilution on the round-close modal, Blankitt fetches the current cap table and shows:

• Total shares before → after (new issued + existing)
• For each holder: % before → % after (and the points difference)

This runs against the live cap table — it includes all current holdings, including any new admissions you've done. It does NOT include any pending convertibles that would convert in the same round; convert those first, then run the preview again to see the combined effect.

Tips

• Option pool: VCs often require expanding the option pool before the round so the round's dilution falls on existing holders, not on them. Account for this by issuing the pool first.
• Anti-dilution: Series A+ typically has anti-dilution protection. If the company later raises at a lower price than the Series A, anti-dilution kicks in — they get more shares to maintain their economic stake. Blankitt doesn't model anti-dilution adjustments yet.
• Always preview before close. The numbers can surprise you, especially with convertible conversions baked in.