alleryStart learning →What happens to existing holders' ownership with each new financing round?
AIt is diluted
BIt doubles
CIt is unchanged
DIt becomes zero
Answer & Solution
Correct answer: A. It is diluted
Issuing new shares in each round reduces the percentage held by the entrepreneur and earlier investors.
Keep practising Valuation (Finance)
Browse all Valuation (Finance) questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
Startups raise money in several rounds rather than one lump sum mainly to:Down rounds were common after which events?A new round priced below the previous round's share price is a:Series A priced shares at 500 and Series B at 650. Series B is an:Founders hold 100 of 125 shares after a round. Their stake is:Post-money is 90 crore with 150 shares outstanding. The value per share is:Founders own 100 shares. A new investor gets 25 new shares for 5 crore. Pre-money is:Founders hold 40 shares. An investor puts in 4 crore for 10 new shares. Post-money valuati