Most angels hear the word dilution and flinch. Cheryl Kellond hears it and gets excited. By the end of this episode, you will too.

Cheryl and Andy break down why dilution is almost always a signal that something good is happening, the pie got bigger, and why the angels who panic about ownership percentages are missing the point entirely. The math is simple once you stop letting the word scare you.

The episode opens with a Portuguese tart and an Australian meat pie, because apparently that’s how you explain equity to people. But the analogy lands: a smaller slice of a much bigger pie is almost always the better outcome. What matters isn’t your percentage, it’s what that percentage is worth when the company exits.

Cheryl walks through what actually happens at each funding round, why angels shouldn’t follow VCs into follow-on bets, and the AngelList data on why doubling down is usually a mistake. The better move is more shots on goal, not more money into the same bet.

Cheryl unpacks cram down rounds, what they are, why founders use them, and why angels almost always misread them as opportunity when they’re actually a distress signal. If a company is trying to get you to reinvest by threatening to convert your preferred shares to common, that’s not an attractive deal. That’s a company in trouble using your fear against you.

She also shares the story that led her to build Play Money the way she did, a cram-down dressed up as a late-stage opportunity, a room full of angels leaning in, and deal terms nobody volunteered to show anyone.

Topics covered:

• Why dilution is a reason to celebrate, not panic
• How the pie analogy actually works across funding rounds
• The angel math: why more bets beats doubling down every time
• Cost basis and why your entry point determines your multiple
• What a cram-down round is and how to spot one
• The sunk cost trap angels fall into when companies struggle
• Play Money’s dilution calculator and how to use it
• Why transparency on deal terms changes everything
• Dilution Calculator letsplaymoney.com/decoded

You don’t need to be a VC to understand dilution. You just need to stop treating it like a dirty word.

Listen: Apple | Spotify | YouTube

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Andy Walsh
2x exited founder and host of Startups Decoded (Top 2% globally). Andy helps founders sharpen judgment and build companies through practical experience and operator insight.

Cheryl Kellond
Founder of Play Money and active angel investor. Cheryl focuses on democratizing angel investing and helping new investors build diversified portfolios while supporting founders with practical guidance and community.

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Disclaimer: The views and opinions shared on Startups Decoded are for informational purposes only and do not constitute investment or legal advice. Always consult a qualified professional before making any financial or legal decisions.