Difference between revisions of "Dilution"

From knowledgebase
Jump to navigation Jump to search
(Created page with "Dilution is devaluation of shares as a result of emitting new shares to raise money: <html> <img src="/static/files/MBI/Module%2010/dilution.PNG" width=600"> </html> As an e...")
 
(Replaced content with "Dilution Category:mbi Category:M10 Category:Term")
Tag: Replaced
Line 1: Line 1:
−
Dilution is devaluation of shares as a result of emitting new shares to raise money:
+
Dilution
−
 
 
−
<html>
 
−
<img src="/static/files/MBI/Module%2010/dilution.PNG" width=600">
 
−
</html>
 
−
 
 
−
As an example imaging the following start situation:
 
−
Round A
 
−
Share price \$1,00
 
−
{| class="wikitable"
 
−
!
 
−
!# Shares
 
−
!Percentage of total
 
−
|-
 
−
|VC
 
−
|4.000.000
 
−
|38,1%
 
−
|-
 
−
|Total
 
−
|10.500.000
 
−
|
 
−
|-
 
−
|}
 
−
'''Scenario: "Company does well": Round B'''
 
−
Share price \$5,00
 
−
Money to be raised \$20.000.000
 
−
Shares to add to pool 4.000.000
 
−
{| class="wikitable"
 
−
!
 
−
!# Shares
 
−
!Percentage of total
 
−
!Value of shares
 
−
|-
 
−
|VC
 
−
|4.000.000
 
−
|27,6%
 
−
|\$20.000.000,00
 
−
|-
 
−
|Total  shares
 
−
|10.500.000
 
−
|
 
−
|
 
−
|-
 
−
|New shares
 
−
|4.000.000
 
−
|
 
−
|
 
−
|-
 
−
|New total
 
−
|14.500.000
 
−
|
 
−
|
 
−
|-
 
−
|}In this scenario there is some dilution but it is 'profitable'. The VC will be happy.
 
−
 
 
−
'''Scenario: "Company does bad": Round B''''
 
−
Share price \$0,10
 
−
Money to be raised \$20.000.000
 
−
Shares to add to pool 200.000.000
 
−
{| class="wikitable"
 
−
!
 
−
!# Shares
 
−
!Percentage of total
 
−
!Value of shares
 
−
|-
 
−
|VC
 
−
|4.000.000
 
−
|1,9%
 
−
|\$400.000,00
 
−
|-
 
−
|Total  shares
 
−
|10.500.000
 
−
|
 
−
|
 
−
|-
 
−
|New shares
 
−
|200.000.000
 
−
|
 
−
|
 
−
|-
 
−
|New total
 
−
|210.500.000
 
−
|
 
−
|
 
−
|-
 
−
|}In this scenario there is huge dilution and not profitable. VC will be unhappy.
 
−
 
 
 
[[Category:mbi]]
 
[[Category:mbi]]
  

Revision as of 19:18, 27 August 2020

Dilution