One of the realities that I grapple with as a founder is how much of the company we expect to keep over the life of the company. This isn't intended to turn into a complaint thread or a place to evangelize bootstrapping and saving money -- I already believe in that. I'm just curious about the expectations of other founders.
After an Angel round, Accelerator, Seed, Series A, and/or setting aside an equity pool for early employees, how much of your company do you expect to split among your founding team at a Series B or beyond? What's left for founders that've gone all the way to Series F or later? I threw together a quick estimate -- assuming a team of four founders it's pretty amazing how quickly founder equity can diminish. Not saying that investors are bad, but it's amazing how quickly your company won't be "your" company after successive rounds of funding.
Everyone is diluted at every round of funding. YC owns 7% of your equity the day you sign their agreement, but that % drops when you issue more shares in each subsequent round. Your illustration assumes that only the founders are diluted.
A good example is airbnb. YC originally owned 6%, but that number drastically dropped as airbnb took the next $5bn of funding.
@613jono If funding is what inhibits your company from existing/growth, your additional equity will be worthless. Too many people with good ideas let their fear of losing equity outweigh existing. Just my two cents.
@eternallykeptbyjesus Well. Raising money is not free, they give you money you give equity and power away.
That is why if you don’t need don’t raise. My company is on that special spot where we are profitable and don’t need outside money.
Getting investment makes sense when more money = fast growth. That is not always true. And hiring more people doesn’t mean higher growth either (and it doesn’t always increase productivity either)
@eternallykeptbyjesus Equity != control. That’s what board seats are for. Also the way you are looking at this is all wrong. Startups die because they don’t have capital, not they don’t have enough equity to give out. One of the biggest tells of a good founder from a bad one is good founders are willing to take a worse deal (i.e., at a lower valuation) with much higher capital (e.g., 2M at 17m valuation instead of 500k at 20M) because they know how difficult and time consuming is it to raise and how important is it to build momentum.
