Finance
Dilutive
Describing a transaction that reduces earnings per share or ownership percentage for existing shareholders, typically by issuing new shares. The opposite of accretive.
Biological Context
Dilution occurs in biological populations too. Gene flow from immigrants dilutes local adaptations. Invasive species dilute native biodiversity. Chemical signals become diluted with distance, reducing their effectiveness. Concentration versus dilution is a fundamental biological trade-off.
Business Application
Equity funding is dilutive—existing owners give up percentage ownership for capital. The trade-off is smaller slice of larger pie. Dilution is acceptable if growth in company value exceeds dilution of ownership. Excessive dilution can demotivate founders and early employees.