Microcosm - 2nd Seedrs crowd-funding round

Hi Thomas / David

As a previous investor I received the e-mail about investing further to avoid share dilution.

The answer to this may be obvious but the figure given to avoid share dilution is low - around 20 percent of the initial investment.

Can anyone illustrate how this works? I'df kind of anticipated having to invest the same amount or more to avoid dilution?

The Microcosm first round offer was 10% for £50,000.

This second round is for a further 5% (for £100k), which would - without pre-emption rights being taken up - dilute all shareholders.

The total number of shares in the entire company increases so that shares totalling 5% of the company can be issued to the new investors.

So the stake owned by a first round investor reduces in terms of the overall proportion of shares in the entire company. But only by a very small amount, because the dilution effects all shareholders.

Consequently, in order to keep at the same % ownership as after the first round, you need only invest a small proportion of your initial investment.

Initial investors will have 48 hours to use their pre-emption rights. Once that period has elapsed, the offer is open to everyone.

There's an example with numbers here.