The Dilution Non-Story: Why 12,435 Software Rounds Show Remarkably Little Has Changed
Based on Carta’s latest data covering Jan 2021-May 2025
The Anti-Clickbait Truth
Despite all the talk about market shifts, founder-friendly terms, and the AI boom, here’s what 4+ years of dilution data actually shows: per Carta’s data, not much has changed. Startups are taking just about the same amount of dilution today in the Age of AI as they have for the past 4+ years:
The Numbers Don’t Lie (They’re Just Boring)
- Seed rounds: 20% dilution in 2021 → 19% in 2025 (1% improvement)
- Series A: 20% → 18% (2% improvement)
- Series B: 16% → 15% (1% improvement)
- Series C: 12.5% → 9.6% (the only meaningful change)
Even for those Series C’s though, round sizes are down, accounting for most of the dilution reduction.
Round sizes otherwise? Also remarkably stable when you zoom out past the 2021-2022 bubble.
What This Actually Means
Dilution Has Been Consistent for Years
All the hand-wringing about “founder-unfriendly” terms vs. “the pendulum swinging back” misses the point. Dilution percentages have been remarkably stable. The 20% rule for early rounds isn’t going anywhere.
Market “Corrections” Don’t Always Correct Everything
Despite the funding winter, valuation resets, and power shifting back to founders, the fundamental economics of venture rounds haven’t budged much. VCs still need their ownership percentages to make the math work.
The AI Bump Is Invisible (So Far)
The chart asks “Is this AI?” for 2025 data. Based on dilution percentages? There’s no obvious AI premium showing up in founder equity retention.
Why This Non-Story Matters
For founders: Stop optimizing for marginal dilution differences. A 1-2% dilution improvement is noise compared to building a company that can raise at higher valuations.
For the ecosystem: All the narrative about dramatic market shifts may be overstated. The fundamentals of venture investing haven’t changed as much as the headlines suggest.
For data nerds: Sometimes the most interesting insight is that there isn’t one. Stability can be more meaningful than volatility.
The Real Takeaway
If you’re spending time worrying about whether you’ll give up 18% or 20% in your Series A, you’re optimizing for the wrong variable. Focus on metrics that drive higher valuations, not marginal dilution improvements that may just be statistical noise.
The venture market loves dramatic narratives about pendulum swings and paradigm shifts. But sometimes the data just shows that the fundamentals are… pretty fundamental.
Maybe the real story isn’t how much dilution has changed, but how little it needs to.
