Thinking about

founder dilution
Carta Insights | June 2024
Dilution
[DY] + [LOO] + [SHUHN]

Dilution (also called equity dilution or stock

dilution) is the decrease in ownership percentage
for existing shareholders when a company issues
or reserves new shares of stock.

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
So…

How much will you

own when you ring the
bell at the NASDAQ?

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Sources of Dilution

Co-Founders
Advisors
Early Employees
Fundraising

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Founder Equity
Most companies have more than one founder (study of 7,764 companies)
Most founding teams split unequally
Most cofounder teams do not split equity equally (especially 3+ founder teams)

2 founder teams 3 founder teams 4 founder teams 5 founder teams

56% 78% 87% 97%

unequal unequal unequal unequal

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Median equity split
In companies with 2 cofounders, the median split is 55% to 45% (before investors, employees, etc)
Founder Equity
There tends to be a “lead” founder in large founding teams
 The largest single decision
impacting your ownership is the
number of cofounders

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Sources of Dilution

Co-Founders
Advisors
Early Employees
Fundraising

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Sources of Dilution

Co-Founders
Advisors
Early Employees
Fundraising

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
Sources of Dilution

Co-Founders
Advisors
Early Employees
Fundraising

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
 When you start to fundraise, you
don’t take shares away from anyone.

You simply add more shares.

©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
©2024 eShares Inc., d/b/a Carta Inc. (“Carta”). All rights reserved.
 Let’s see some real numbers

Modeling here done in Carta Launch

 What is Carta Launch?
The home of pre-seed startups
Free until you raise your first million

Issue equity to your team Raise SAFEs from your investors

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