Startup Dilution Per Round Is Not Rising Despite VC Claims

Startup founders - no, dilution per round is NOT rising. You can safely push back on VCs who use "the market" in this way to justify a larger ownership stake.

Been frankly annoyed at the number of screenshot DMs that I'm sent where the investor uses some version of this argument. It usually takes the form of "the last 3 deals we've seen" or "when we canvas the current market". Decidedly not data driven.

Let's dig into some real data. Chart below shows dilution per round for 12,435 priced venture rounds raised by US software companies on Carta since January 2021. No bridges/extensions included.

1. After many years with 20% dilution as the median at seed and Series A, that median has drifted down to 19% and 18% respectively so far in 2025.

2. Series B and Series C dilution figures are more scattered but also generally trend towards smaller percentage values over time.

3. Round sizes are robust in seed and Series A, while Series B and C are not quite as high as they were in the peak moments of 2021.

4. Healthy round sizes + lower dilution = valuations that are growing faster than capital raises.

5. Yes, this has everything to do with AI startups. They raise faster, typically for more money, and their dilution is often a little lower than standard software businesses.

Now this is not a completely rosy picture for founders. Yes, dilution per round seems to be holding steady or declining in most cases - but the number of rounds completed is also falling.

General takeaway: 𝗩𝗖𝘀 𝗿𝗲𝗺𝗮𝗶𝗻 𝘄𝗶𝗹𝗹𝗶𝗻𝗴 𝘁𝗼 𝗽𝗮𝘆 𝘂𝗽 (𝗶𝗻 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝘁𝗲𝗿𝗺𝘀) 𝗳𝗼𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘁𝗵𝗲𝘆 𝗿𝗲𝗮𝗹𝗹𝘆 𝗯𝗲𝗹𝗶𝗲𝘃𝗲 𝗶𝗻. 𝗧𝗵𝗲𝘆 𝗷𝘂𝘀𝘁 𝗯𝗲𝗹𝗶𝗲𝘃𝗲 𝗶𝗻 𝗳𝗲𝘄𝗲𝗿 𝗰𝗼𝗺𝗽𝗮𝗻𝗶𝗲𝘀 𝘁𝗵𝗮𝗻 𝘁𝗵𝗲𝘆 𝘂𝘀𝗲𝗱 𝘁𝗼, 𝗶𝗻 𝗮𝗴𝗴𝗿𝗲𝗴𝗮𝘁𝗲.

And look, maybe accepting that term sheet that comes with 28% dilution is worth it for your business! Totally possible. But investors should make that case from first principles rather than relying on some vague hand-waving towards "the market".

Data for the (startup) people 🙏

#startups #founders #dilution #fundraising