Dear SaaStr: Is It Normal for a Founder CEO to End Up With Just 10% Equity?
Yes. Roughly speaking, this is what generally will happen after 3 rounds of traditional venture capital. If the company sells 15–20% in each round, and 15–20% is reserved for employees, that typically will leave 15–25% for the founders in total.
Q4 2023 Median primary round dilution:
⚪️ Seed: 19.9%
🟣 Series A: 20.0%
🟠Series B: 16.3%
🟢 Series C: 13.5%
🔵 Series D: 11.0%(via @PeterJ_Walker @cartainc) pic.twitter.com/TJqnhPETpv
— Ron Pragides (@mrp) February 8, 2024
A few slightly older analyses here: The Pernicious Effect of Dilution in SaaS: The Cold, Hard, Bloody numbers – SaaStr
It’s not the end of the world. This is after 3 full rounds of venture capital, and if you are then on the path to IPO or Big Acquisition (which hopefully you are if you take 3 rounds), that 10% (or whatever amount) will still be worth a lot.
But if you can — skip a round. Or at least, half a round — by stretching a little longer until the next round.
Be a little bit more frugal. Maybe even, don’t take that extra round if you don’t need it and can’t put it to good work.
Carta: The Actual, Real Dilution from Series A, B, C and D Rounds
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via https://www.aiupnow.com
Jason Lemkin, Khareem Sudlow
