After early employees have been offered stock options, the next dilutive event will likely be a capital raise. When new investors come into the company and offer money to the business in exchange for an ownership stake. The company will create brand new shares to be issued to these new investors and the founders will retain the existing shares that they already had. The first round of capital raising is typically a seed round where early stage investors, such as angel investors, family offices, or seed funds, acquire in the range of five to 20% of the company in exchange for their invested money. In our example, the company gives up 10% of its equity capital in exchange for investment, which means that all the shareholders in the company, which in this case are the founders and the initial employee hires, will see their ownership stake diluted by 10%. To set up a simple cap table, the amount of money invested is not important, but we will address this later. The updated cap table shows founders now own 83.25% of the company calculated as the 92.5% that they owned before the seed round, multiplied by 1 minus the 10% ownership stake held by the seed investors, and the initial employees now own 6.75%. That's the 7.5% they held previously, multiplied by 1 minus 10%. The new seed investors will come in at 10%.