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Will my percentage ownership be diluted?

Yes. An equity stake will almost certainly be diluted.

Successful startups host many rounds of financings, all the way to an IPO. For each financing, the startup issues additional stock to the new investors. As long as the value of the company increases with each funding round, this is healthy and normal. For example, the first investor in Facebook, Peter Thiel, originally purchased ~10% of the company for $500,000. By 2011, that stake was diluted down to under 3%, but estimated to be worth ~$2 billion.

Sometimes, when things are not going well, the startup is given the option of going bankrupt or raising more money in a "down round," which means the value of the company decreased since the last financing. This is very bad for the founders and past investors alike; the dilution happens much more rapidly. But it's preferable to the startup going bankrupt and the investors losing everything.

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