They’re raising from a position of strength for capital they don’t need. As far as I know, they haven’t published their valuation, but it is very possible they’re giving up little equity. Plus, giving up some equity to meet customer demand is generally a good idea as more revenue means higher valuation.
Taking on debt is MUCH faster and easier way for all shareholders in a startup to end up with $0.
Loans are a lot better when you're in a more stable scenario - lower growth and/or lower risk of implosion due to just being more established.
As well as Oxide is doing, startups are still volatile and taking on debt that might need to restructure or be defaulted can create a lot worse outcome for shareholders than just "we diluted and then stopped growing as much".
A confusing thing about fundraising and dilution is that the new shares don’t take away value from existing shareholders.
If each share is worth $1 at the valuation used in the raise, then an investor adding $100 million gets 100 million shares for it. The shares aren’t taken away from anyone, they're issued in exchange for the capital.
So ideally the dilution is neutral to the value of the equity. In practice this is highly variable because the valuations are fuzzy numbers used for the raise, but you get the idea.
If a company can get the same growth without raising, that would be better because the proportional ownership stays higher. However, the reason companies give equity in exchange for capital is that they need the cash for growth and can’t get it on better terms anywhere else.
That's always struck me as a very idealistic way of looking at dilution.
Another way to look at it, is that it's partly locking in the value of those shares at the time of dilution, effectively reducing the variance of the future value of the existing shares.
As a thought experiment:
If you're holding a lottery ticket that you bought, and someone comes along, says they're going to buy 1,000 lottery tickets, but promises to share any winnings with you pro-rata. You don't really have a choice to say no.
You'd probably be really annoyed, if your ticket is a winning ticket, you split the jackpot and don't even get a life-changing amount of money back for it. If any of theirs wins, you likewise get a modest amount, but you weren't bothered about losing £1.
It's an expectation neutral thought experiment, but reducing variance isn't always wanted!
> You'd probably be really annoyed, if your ticket is a winning ticket, you split the jackpot and don't even get a life-changing amount of money back for it. If any of theirs wins, you likewise get a modest amount, but you weren't bothered about losing £1
Your lottery comparison isn’t logical. I think you’re just repeating the same misunderstanding I was trying to dispel above.
If you want to force the analogy, you would have to imagine a lottery where your win and the investor’s wins are tied together. Either you both win or you both lose. But to make the analogy actually work, you’d have to imagine a lottery where their ticket purchase increase the winnings proportionally.
So in this bad forced lottery analogy, you would have a smaller number of the overall tickets, but the same odds of winning as before and the payout would be the same as before.
You’re making the common mistake of assuming that the company could get the same outcome without taking investment money. It’s common to imagine getting that your 0.1% of a sweet $1 billion IPO without ever getting diluted along the way, but getting a company to that IPO point requires a lot of cash. If a company is lucky enough to have all the cash flow they need to get there then they can do it all without dilution. Most companies need to raise some cash to get there, though.
So raising the money actually lowers your variance of getting a large payout, because the cash is what enables the growth to that liquidity event.
But that's not how shares work. And companies aren't lotteries.
In your example, the additional 1,000 lottery tickets might add nothing whatsoever to the value of the winning lottery ticket in your hand. It's just not a good metaphor. That's not how buying shares in a company works. Investors don't invest using bearer instruments of totally unknown value. They invest using cash. Cash always adds the value of the cash. That's intrinsic to it being cash.
A much better way to think about it is that you have something in your hand that's worth X dollars and has Y shares. If somebody were to give you X dollars in investment in exchange for Y additionally issued shares, then at the end of that operation the company, by definition, would be worth $2x, and your Y shares would be exactly half of that value, meaning that you start with X and you end with X.
As mentioned, knowing exactly what the company is worth in dollars is a little tricky, but that's the premise, and it completely makes sense.
Back to your lottery ticket example: let’s say you had a company with assets consisting solely of a winning scratch-off lottery ticket worth $1,000, and then you agreed to sell half the company to an investor who contributed $1,000 in cash. At the end of the exercise you would have a company worth exactly $2,000 (the company's assets include the lottery ticket and the new $1,000 of invested cash) and you would own exactly half of it.
If you have a unique skill at buying scratch-off lottery tickets and can turn that $1,000 in cash into more than $1,000 in lottery tickets, then you and the investor win from the transaction. That's what the investor is betting on.
If you can't get those results then the investors shouldn't invest in you and you shouldn't seek investment.
New shares take away from existing shareholders in every circumstance except one: that the money raised is invested in a way that durably grows the business in excess of the dilution.
Every story where a company sold for an amount that wiped out employee equity (for example every Bending Spoons acquisition) is because they raised too much and it never materialized into (sufficient) growth.
They’re raising from a position of strength for capital they don’t need. As far as I know, they haven’t published their valuation, but it is very possible they’re giving up little equity. Plus, giving up some equity to meet customer demand is generally a good idea as more revenue means higher valuation.
Forbes has our valuation, at $6b: https://www.forbes.com/sites/rashishrivastava/2026/10/09/thi...
Isn't the correct vehicle when in such a position called a "loan"?
Taking on debt is MUCH faster and easier way for all shareholders in a startup to end up with $0.
Loans are a lot better when you're in a more stable scenario - lower growth and/or lower risk of implosion due to just being more established.
As well as Oxide is doing, startups are still volatile and taking on debt that might need to restructure or be defaulted can create a lot worse outcome for shareholders than just "we diluted and then stopped growing as much".
depends on market conditions and visibility on future revenue. And current balance sheet, cost of debt vs cost of equity.
Not necessarily, no. That’s just one option with its own risks and tradeoff
A confusing thing about fundraising and dilution is that the new shares don’t take away value from existing shareholders.
If each share is worth $1 at the valuation used in the raise, then an investor adding $100 million gets 100 million shares for it. The shares aren’t taken away from anyone, they're issued in exchange for the capital.
So ideally the dilution is neutral to the value of the equity. In practice this is highly variable because the valuations are fuzzy numbers used for the raise, but you get the idea.
If a company can get the same growth without raising, that would be better because the proportional ownership stays higher. However, the reason companies give equity in exchange for capital is that they need the cash for growth and can’t get it on better terms anywhere else.
That's always struck me as a very idealistic way of looking at dilution.
Another way to look at it, is that it's partly locking in the value of those shares at the time of dilution, effectively reducing the variance of the future value of the existing shares.
As a thought experiment:
If you're holding a lottery ticket that you bought, and someone comes along, says they're going to buy 1,000 lottery tickets, but promises to share any winnings with you pro-rata. You don't really have a choice to say no.
You'd probably be really annoyed, if your ticket is a winning ticket, you split the jackpot and don't even get a life-changing amount of money back for it. If any of theirs wins, you likewise get a modest amount, but you weren't bothered about losing £1.
It's an expectation neutral thought experiment, but reducing variance isn't always wanted!
> You'd probably be really annoyed, if your ticket is a winning ticket, you split the jackpot and don't even get a life-changing amount of money back for it. If any of theirs wins, you likewise get a modest amount, but you weren't bothered about losing £1
Your lottery comparison isn’t logical. I think you’re just repeating the same misunderstanding I was trying to dispel above.
If you want to force the analogy, you would have to imagine a lottery where your win and the investor’s wins are tied together. Either you both win or you both lose. But to make the analogy actually work, you’d have to imagine a lottery where their ticket purchase increase the winnings proportionally.
So in this bad forced lottery analogy, you would have a smaller number of the overall tickets, but the same odds of winning as before and the payout would be the same as before.
You’re making the common mistake of assuming that the company could get the same outcome without taking investment money. It’s common to imagine getting that your 0.1% of a sweet $1 billion IPO without ever getting diluted along the way, but getting a company to that IPO point requires a lot of cash. If a company is lucky enough to have all the cash flow they need to get there then they can do it all without dilution. Most companies need to raise some cash to get there, though.
So raising the money actually lowers your variance of getting a large payout, because the cash is what enables the growth to that liquidity event.
That's the scenario I said, where they share any winnings from their tickets too. You still have the same expected value.
> You still have the same expected value.
Yes, which makes the lottery comparison moot.
But as an existing shareholder you have the right to buy in to the new shares to maintain your percentage if you want to.
But that's not how shares work. And companies aren't lotteries.
In your example, the additional 1,000 lottery tickets might add nothing whatsoever to the value of the winning lottery ticket in your hand. It's just not a good metaphor. That's not how buying shares in a company works. Investors don't invest using bearer instruments of totally unknown value. They invest using cash. Cash always adds the value of the cash. That's intrinsic to it being cash.
A much better way to think about it is that you have something in your hand that's worth X dollars and has Y shares. If somebody were to give you X dollars in investment in exchange for Y additionally issued shares, then at the end of that operation the company, by definition, would be worth $2x, and your Y shares would be exactly half of that value, meaning that you start with X and you end with X.
As mentioned, knowing exactly what the company is worth in dollars is a little tricky, but that's the premise, and it completely makes sense.
Back to your lottery ticket example: let’s say you had a company with assets consisting solely of a winning scratch-off lottery ticket worth $1,000, and then you agreed to sell half the company to an investor who contributed $1,000 in cash. At the end of the exercise you would have a company worth exactly $2,000 (the company's assets include the lottery ticket and the new $1,000 of invested cash) and you would own exactly half of it.
If you have a unique skill at buying scratch-off lottery tickets and can turn that $1,000 in cash into more than $1,000 in lottery tickets, then you and the investor win from the transaction. That's what the investor is betting on.
If you can't get those results then the investors shouldn't invest in you and you shouldn't seek investment.
> In your example, the additional 1,000 lottery tickets might add nothing whatsoever to the value of the winning lottery ticket in your hand
They add greatly to your expected chance of winning, given you have pooled winnings.
So do additional investment rounds as they theoretically increase the viability of the company.
New shares take away from existing shareholders in every circumstance except one: that the money raised is invested in a way that durably grows the business in excess of the dilution.
Every story where a company sold for an amount that wiped out employee equity (for example every Bending Spoons acquisition) is because they raised too much and it never materialized into (sufficient) growth.
Similarly, printing more of a nation's currency does not increase inflation.
Printing more money doesn’t come with an increase in GDP or assets.
Why do you think there wouldn’t be? They are just different prices.