Your slice gets smaller

Watch your green slice, then its value.

You own **5 lakh** of a young company's **50 lakh** shares: **10%**. To grow, it raises money several times, each time by selling **new** shares to a new investor.

Your slice of the company **shrank**. What your slice is worth **grew**. Both are true at once.

Who invests, and when

Each time a private company sells new shares to raise money is a **funding round**. Different kinds of investor tend to arrive at different stages.

• Angel investors the earliest money — Back an idea before it earns any revenue. Small sums, the highest risk. Their money is often called the **seed** fund.
• Venture capital (VC) Series A, B… — Funds that invest in young companies with a working business and room to grow. Each round gets a letter: Series A, then B.
• Private equity (PE) later rounds — Invests larger sums in bigger, more established private companies, and often wants a say, such as seats on the board.

**Remember:** every round creates **new** shares. Nobody takes yours away, but there are more shares in total.

Play the funding rounds

Press play, or tap each round.

Giving existing owners a smaller slice by adding new shares is called **dilution**.

Example company and prices.

The price decides your value

Try each price.

Back at the first round: the company sells **7 lakh** new shares. You paid **₹10** a share. What changes if the new investor pays a different price?

**Remember:** dilution always shrinks your slice. Whether that hurts depends on the **price** the new shares are sold at.

Example prices.

Slice or value?

Tap each ending.

Same 5 lakh shares, before the rounds and after three of them. Switch how the story ends.

**Remember:** a smaller slice of a much bigger company can be worth far more. The percentage alone doesn't tell you.

Example figures.

Check — Question 3 of 4

Put each one where it belongs.

What you now know

• Private companies raise money in funding rounds by selling new shares.
• Angels invest first, VCs fund the growth rounds (Series A, B…), private equity comes in later and bigger.
• New shares make every existing owner's slice smaller: this is dilution.
• Your shares don't change; the total number of shares does.
• Whether dilution hurts depends on the price the new shares are sold at.
• A smaller slice of a more valuable company can be worth more.