Dilution
Dilution refers to the reduction in a shareholder’s ownership percentage following the issuance of new securities. It is mechanical in any fundraising round, stock-option grant, or conversion of notes into equity.
In practice
A founder holding 60% before a Series A round giving 25% to a new investor ends up at 45%. If a 10% BSPCE pool is created at the same time, total dilution exceeds 30 points. Dilution is not inherently bad — 45% of a company valued at €10M is worth more than 60% of one valued at €3M — but it must be planned and documented in a shareholders' agreement.