Equity
The ownership stake held by shareholders in a company, representing their residual claim on profits after all debts and obligations are paid. Equity is expressed as book value on the balance sheet or as market value depending on the context.
In practice
Dilution of equity is the implicit cost of every funding round. If a founder holds 100 percent of a company valued at 500,000 euros and raises 500,000 euros at a 1 M€ pre-money valuation, they subsequently hold 66.7 percent of a 1.5 M€ company — their stake is worth 1 M€. The capitalisation table documents the full history of dilution events and each shareholder’s rights: maintaining it accurately is a governance obligation.