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Home Q&A Forum C corp and equity dilution?

Startup

C Corp

Ohio

Asked on May 22, 2023

C corp and equity dilution?

I am an entrepreneur who is in the process of forming a C Corp. I am looking to raise capital to fund my business and I am considering issuing equity to potential investors. I am concerned that issuing equity to investors could lead to dilution of my ownership, so I am looking for legal advice on the best way to structure my equity offerings to minimize dilution.

1 Attorney answer

Answer

Startup

Ohio

Answered 389 days ago

Paul S.

ContractsCounsel verified

Business Lawyer
Licensed in California, Ohio
Free Consultation

If you want to avoid dilution, then you need to fund the business with your own resources, and pay all your workers with money rather than equity. Otherwise, when building a business, dilution is simply a reality you have to live with. You can start out with a large amount of ownership, for example, 80% of the authorized shares, but over time dilution is inevitable. Which would you rather have, 90% of a company worth $200,000, or 55% of a company worth $1 million?

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