The Entrepreneur'sRESOURCE

Explore the Resource Center to find resources.  Designed with entrepreneurs in mind, our resource center allows you to find materials to grow great ideas.

What is dilutive capital?

Christina Hernandez Sherwood, eMed Editor, MedCity News

What is dilutive capital?

Dilutive capital is an investment that adds shares to your company, decreasing the amount other owners hold in the business. In a simplified example: a healthcare company begins with 100,000 shares owned entirely by the entrepreneur. To raise additional money, the entrepreneur issues 50,000 new shares investors will buy. When those are sold, the company now has 150,000 shares -- 100,000 owned by the entrepreneur and 50,000 owned by new investors. The entrepreneur has diluted his share in the company and now owns two-thirds of the business.

Investors could also ask for seats on the company's board of directors or seek a preference in being paid once the company has been sold.

FAQs are a weekly feature on eMed for current and aspiring healthcare entrepreneurs.

comments powered by Disqus

Search for Resources

Stay Connected

Email Newsletter Signup

Want to get connected? Sign up to receive regular news, polls and updates from The Kauffman Foundation.

Email Newsletters

Want to be up-to-date with the latest news and updates from To subscribe, just give us your email address below; you'll choose which e-newsletters you'd like to receive on the next screen.