Buzz Archive:
The Dilution Concern for Founders

by Joseph W. Bartlett, Of Counsel, Sullivan & Worcester LLP and Founder of VC Experts.com, 10/28/2009

If my students at Cornell University take away one thought from the entire semester of instruction, that thought is embedded in the following exposition:

First, I draw on the blackboard an inverted bell shaped curve, the top of the curve heading downwards rather than up. Then, I remind them of the old saying in the commercial real estate business: "There are three rules for making money in commercial real estate and they are Location, Location, Location." I then migrate that old joke to the venture capital business. "There are three phenomena that trivialize even the best of investment strategies: Dilution, Dilution, Dilution."

Sound off on this week's buzz in the Comments Section.