The venture landscape is shifting under our feet. The old way of doing things is dying. Based on what I'm seeing in the market, a deep understanding of dilution is about to become the single most critical differentiator for successful investors in 2027. Here's why and how to get ahead of the curve.
What I've Learned From 121 Companies
A few patterns in dilution come up again and again.
The founders who handle dilution well understand that the market doesn't care about your roadmap.
The Framework That Actually Works
Here is a simple framework for evaluating dilution. It's not complicated, but it requires discipline.
Step 1: the data tells a different story than your gut
This is where most people go wrong. They skip this step entirely and jump straight to execution. Don't do that.
Step 2: the market doesn't care about your roadmap
Once you have the foundation right, this becomes much easier. I've watched founders struggle with this for months when the answer was staring them in the face.
Step 3: Iterate relentlessly
Nothing works perfectly the first time. The companies that get dilution right treat it as an ongoing process, not a one-time project.
The Reality Nobody Talks About
A lot of the advice on dilution rests on assumptions that made sense five years ago. The world has moved on.
The first thing to understand is that timing is everything in this game. I've seen this play out across dozens of companies. The pattern is unmistakable.
Many teams spend months on the wrong path before realizing that most founders overthink this and underspend on execution. Once they make the switch, everything changes.
Real Talk: What Actually Matters
Here is what actually matters in dilution.
First, execution speed beats perfection. Every time. Companies rarely fail because they moved too fast on dilution. Many fail because they moved too slowly.
Second, measure everything. If you can't measure it, you can't improve it. Set up tracking from day one, even if it's basic.
Third, talk to your users. It sounds obvious, but many founders make decisions about dilution in a vacuum. Get out of the building. Talk to real people.
This connects to broader themes around dilution, term sheets, portfolio construction that I've been thinking about a lot lately.
Wrapping Up
I've shared a lot here, and I know it can feel overwhelming. But you don't need to get dilution right on day one. You just need to get started and keep improving.
Founders who do well at dilution tend to share one trait: they're relentlessly practical. They don't chase perfection. They chase progress.
That's the mindset I'd encourage you to adopt. Start where you are. Use what you have. Do what you can. And keep pushing forward.
As always, I'm rooting for you.
Frequently Asked Questions
Q:Do all experts agree with this view?
No, and that's fine. The best ideas in business are often contrarian. I share my perspective based on my experience and data, but I encourage you to seek out opposing viewpoints and form your own conclusions.
Q:How can I apply this thinking to my own situation?
Start by identifying the core principle behind the opinion, not the specific example. Then ask yourself: does this principle apply to my context? If yes, test it in a small, low-risk way before going all in.
Q:What experience informs this perspective?
This perspective comes from over a decade of building companies in Silicon Valley, two successful exits (RemoteTeam to Gusto, MovieLaLa to Gfycat), and investing in 234 startups including Anthropic, OpenAI, and Scale AI. I write about what I've lived.