Average Equity Given Up Per Funding Round [Data Deep-Dive]

When building a startup, every funding round feels like a milestone—and it is. But each of those milestones comes at a cost. That cost is equity. Give up too much and you lose control. Hold on too tight and you might stall growth. So, how much equity should you really give up in each round?

1. Founders give up an average of 15–25% equity in a typical Seed round

What is a Seed round?

A Seed round is usually the first major funding round after a startup has built a prototype or MVP (minimum viable product). At this point, you might already have some users or early traction but not much revenue. The goal here is to secure funding to grow—hire a few people, market the product, and refine the business model.

Why do founders give up so much?

The 15–25% range reflects the high risk investors are taking. At the Seed stage, most startups are still pre-profit, and many haven’t figured out a repeatable way to acquire customers. That makes the investment risky, so investors ask for more ownership in exchange.

On your end, you need the money. You’re building, testing, and trying to prove that your idea works. That creates a natural tension: you want capital without giving away too much of your company. Investors want a big enough slice to justify the risk.

How can you keep dilution low?

Here are a few strategies:

• Raise only what you need. It’s tempting to grab as much cash as possible, but larger rounds mean more dilution. Think about how much you need to reach the next milestone—enough to prove traction, expand the team, or prepare for Series A.
• Increase your valuation. Easier said than done, but more traction equals more leverage. Before you raise, focus on growing your customer base, getting good retention, and hitting key product goals.
• Use SAFEs or convertible notes. These instruments let you defer valuation talks until later. That can be good if you’re confident the company will be worth more in a few months.

Actionable advice

• Target a valuation that supports your growth goals but still appeals to investors.
• Be prepared to defend your valuation with real data: user growth, engagement, pilot results.
• Bring more than one investor to the table. When investors know you’re talking to others, you’re more likely to get favorable terms.
• Always model your cap table after the round. Use simple tools like Capshare or Carta to visualize what your ownership looks like post-deal.

2. Pre-seed rounds often see 7–12% equity given up

What makes pre-seed different?

Pre-seed funding typically comes even earlier than a Seed round. It might come from angel investors, friends and family, or micro VCs. At this stage, your company may just be an idea, or you might be validating the concept with early market research or wireframes.

Because the business is so early, investors don’t usually write large checks—maybe $50K to $500K. The equity given up is usually smaller too, but relative to the valuation, it’s still meaningful.

Why it still matters

Many founders assume early rounds don’t matter that much for dilution. But if you’re careless here, you can create problems that compound over time. Giving up 12% of your company when it’s worth only $1M means those shares are expensive later on when your valuation is $50M.

How to play the pre-seed right

• Bootstrap if you can. Delay raising money until you’ve got a little traction. That gives you more leverage.
• Raise from people who offer value. Pre-seed investors should bring more than cash. Look for advisors, domain experts, or connectors who can help you hit your next milestone.
• Be crystal clear on terms. Don’t rush into SAFEs or notes without understanding how they’ll convert. Terms like discounts, valuation caps, and MFN clauses can change how much equity you’re really giving up.

Actionable advice

• Limit your raise to what gets you to Seed with a stronger story.
• Avoid raising too much from too many people. You don’t want a messy cap table later.
• Model dilution scenarios across different valuation outcomes. Always know what you’re giving up—not just now, but when these instruments convert later.

3. Series A rounds typically involve 20–30% equity dilution

The jump from Seed to Series A

Once you’ve nailed your product, started to generate consistent revenue, and built a team, you’re ready for Series A. This is where venture capital firms start writing larger checks—usually in the range of $2M to $15M.

With that money, you’re expected to scale up. That might mean launching in new markets, growing the sales team, or investing in product expansion.

Why dilution increases here

VCs want a meaningful stake in your company. For them, owning 20%+ gives them a seat at the table and potential for a big return. Since they’re writing bigger checks, they want ownership that reflects that.

Also, by now, you’ve got existing investors from earlier rounds. They often participate in this round to maintain their ownership. That means the new investor’s stake comes at the cost of even more dilution across the cap table.

How to manage this round

• Have your data ready. At Series A, investors want to see metrics: MRR growth, churn, CAC vs LTV. You need a clean data room and a strong narrative.
• Get multiple term sheets. Just like in Seed, competition helps drive better terms.
• Understand board dynamics. VCs may ask for a board seat. Make sure you know what rights you’re giving up beyond just shares.

Actionable advice

• Build a detailed financial model before raising. Show where the capital goes and how it drives growth.
• Consider setting up an option pool before the round closes. Investors may ask for it to be included in the pre-money valuation, which increases your dilution.
• Run through cap table scenarios for a best-case and worst-case raise. Don’t be caught off guard by dilution percentages.

4. By Series B, founders may give up an additional 10–20% equity

What happens in a Series B round?

By the time you reach Series B, you’ve likely proven your product-market fit, have a repeatable sales process, and are starting to grow quickly. Investors at this stage want to see that you know how to spend money efficiently to scale revenue. Series B checks are usually larger—ranging from $10M to $40M—and the expectation is clear: growth.

But bigger checks come with a bigger ask. Founders often part with another 10–20% of their equity to bring in these funds.

Why this level of dilution makes sense

At this point, your company likely has multiple investors and a more complex cap table. The valuation is much higher than at Seed or Series A, but because the company is worth more, investors still need a significant percentage to justify their investment.

They’re also de-risking the opportunity. You’ve got traction, so the odds of success are better, but there’s still a long way to go before IPO or acquisition. Investors want equity that matches both the opportunity and the remaining risk.

How to protect your stake

• Negotiate on valuation and structure. A slightly higher valuation can significantly reduce dilution at this stage. Also consider how secondary shares or SAFEs convert to minimize surprises.
• Be smart with your option pool. Investors may insist on refreshing the employee stock pool. Try to negotiate that refresh to happen after the round, not before, so the dilution is shared fairly.
• Bring in strategic investors. Don’t just take capital—look for firms that bring operational expertise or access to important markets. That can justify the dilution more than just the cash.

Actionable advice

• Be careful with pro-rata rights from earlier investors. If they all participate in Series B, it can crowd out space for new investors and increase dilution to you.
• Revisit your financial plan. Series B investors expect a clear path to Series C or profitability. Show them how their money fuels that growth.
• Cap table modeling is non-negotiable now. You must understand the equity effects across multiple future rounds. Tools like Foundersuite, Eqvista, or Pulley can help.

5. In a Series C, equity given up averages around 7–15%

What makes Series C different?

At this point, you’re no longer proving your product. You’re scaling a working business. Series C is often about expanding to new markets, acquiring companies, or doubling down on what’s working. You’re raising capital not just to grow—but to dominate.

Because of this, Series C funding typically comes with lower dilution. Valuations are higher, and the risk is lower. As a result, the equity sold in this round often falls between 7–15%.

What investors want at this stage

Investors in Series C are usually late-stage venture firms, growth equity funds, or even private equity firms. They’re looking for solid financials, consistent growth, and a clear exit strategy within a few years.

They’re not here to take high risks—they’re here for the final push. That means they don’t need massive ownership—just enough to participate meaningfully in the upside.

How to handle the round well

• Be clear about the use of funds. Series C money is often used to grow faster or prepare for an IPO. Know exactly what you’re spending on and be ready to defend that plan.
• Push for better terms. With less risk for investors, you’ve got more room to negotiate. Push for better liquidation preferences, board structures, or reduced protective provisions.
• Start thinking about exit scenarios. Some investors might want to know your ideal exit strategy. Be prepared with a few scenarios—IPO, M&A, or strategic acquisition.

Actionable advice

• Make sure your house is in order: audited financials, legal cleanups, and solid operational metrics are expected.
• Avoid over-raising. It can inflate expectations and create unnecessary dilution.
• Plan for key hires post-Series C. You’ll need seasoned executives to take you to the next level, and having funding available for them is crucial.

6. Across Seed to Series C, founders cumulatively give up 35–60% of the company

The big picture of dilution

When you stack all the rounds together—from pre-seed to Series C—you start to see the cumulative effect of dilution. Each round chips away at your ownership. What starts as 100% ownership might drop to just 40% or even less after three or four rounds.

This isn’t always bad—it’s part of building something big. But it’s important to understand the trajectory, especially as more investors come onboard and the stakes get higher.

Why cumulative dilution matters

Dilution affects everything—your control, your exit payday, your say in decisions. A founder who ends up with just 10% of the company at IPO might still make millions, but they might also be sidelined in key decisions.

On the other hand, a founder who retains 40% and grows the company slowly might end up with less cash, but more power and control.

How to avoid excessive dilution

• Raise only when needed. Many startups raise money too early or too often. Be strategic. Raise when you’ve hit a milestone that justifies a higher valuation.
• Don’t overbuild your team early. Big teams cost money, which increases your burn rate. The faster you burn, the sooner you need more capital.
• Be picky with investors. It’s not just about the check. Good investors help your valuation go up faster. That reduces how much equity you give up next time.

Actionable advice

• Use scenario modeling. See what happens to your ownership if you raise three more rounds. Adjust your plans based on the outcomes.
• Incentivize your team with equity, but manage the pool carefully. Giving away too much to early hires can hurt you later.
• Stay focused on the endgame. If you want to retain control, dilution should always be top-of-mind when negotiating funding.

7. Angel investors in early rounds usually demand 10–20% equity

Who are angel investors?

Angel investors are typically individuals who invest their own money into startups. They often come in during pre-seed or seed rounds, before large VCs get involved. These are often former founders, industry veterans, or wealthy professionals.

Their investment size can range from $25K to $1M, depending on their appetite and your startup’s stage.

Why they ask for 10–20% equity

Early on, your startup is high risk. There’s little proof that it’ll work. Angels are taking a leap of faith, so they want a meaningful share in return.

They also want enough equity to feel invested in your success—not just financially, but emotionally and intellectually. A 1% stake doesn’t give them much skin in the game. But 10%? That’s serious.

How to approach angel funding smartly

• Don’t give it all to one person. Spread your angels out. Multiple small checks from experienced angels often bring more value than a single large one.
• Negotiate active involvement. Some angels are happy to help—others aren’t. Clarify up front what level of involvement you want and they expect.
• Use SAFEs with caps. This can limit the long-term impact on your cap table if you convert early at a reasonable valuation.

Actionable advice

• Don’t just accept the first check. Shop around. Angels vary wildly in how helpful they are.
• Make sure your legal docs are tight. Use standard instruments like YC’s SAFE or standard convertible notes to reduce confusion later.
• Treat angel capital as your last stop before institutional funding. Use it to build momentum, not just cash flow.

8. Convertible notes can result in 20–25% effective dilution upon conversion

What are convertible notes?

Convertible notes are a form of short-term debt that converts into equity at a later financing round—usually your next priced round. Startups often use them when they need money quickly but don’t want to set a valuation yet.

These notes usually come with a discount (typically 10–25%) and/or a valuation cap (a ceiling on the valuation at which the note will convert). When that future round happens, the notes convert into equity at more favorable terms than new investors are getting.

Why dilution gets tricky with notes

The challenge? You might not feel the dilution immediately, but it hits later—often when you least expect it.

Here’s a common scenario: you raise $500K in convertible notes with a 20% discount and a $5M cap. Then, a year later, you raise a $10M Series A. Those notes don’t convert at $10M—they convert at the lower of the cap or discounted price. That can result in the note holders taking up 20–25% of your company, especially if your company’s valuation hasn’t risen dramatically.

How to keep conversion dilution under control

• Cap your valuation wisely. Don’t set the cap too low or you’ll pay a big dilution price later. Set it based on where you realistically think you’ll be at the next raise.
• Don’t raise too much with notes. The more notes you issue, the more equity they’ll demand later. Keep this type of funding lean.
• Track your conversion math. Many founders forget how much these notes are worth until it’s too late. Use spreadsheets or tools like LTSE Equity or Capbase to monitor.

Actionable advice

• Always calculate the worst-case dilution scenario before signing.
• Model different Series A valuation outcomes to see how note conversion impacts your equity.
• Watch out for MFN (most favored nation) clauses—these can trigger even more dilution if you offer better terms later to another noteholder.

9. SAFEs typically convert into 5–15% equity

What is a SAFE?

A SAFE (Simple Agreement for Future Equity) is like a convertible note, but without the debt part. It was created by Y Combinator to simplify early-stage investing. SAFEs convert into equity at your next priced round, usually with a valuation cap and/or discount.

They’re faster, cheaper, and cleaner than notes—but the dilution still happens. And if you’re not careful, it can sneak up on you.

Why the 5–15% range matters

Most startups that use SAFEs in their pre-seed or seed rounds end up giving away 5–15% equity once the SAFEs convert. That might not sound like a lot, but when you’re trying to preserve founder control, every percentage counts.

Let’s say you raise $300K on a SAFE with a $3M cap. Later, you raise a Series A at $6M. Those SAFE holders get their equity at half price, effectively owning 10% of your company for a modest investment. Multiply that by multiple investors and you see how it adds up.

How to use SAFEs wisely

• Be transparent with your investors. Make sure they understand how and when the SAFEs convert. That reduces surprises (and lawsuits).
• Use post-money SAFEs. YC’s newer version of the SAFE calculates dilution more clearly. It tells you upfront how much of the company you’re giving away.
• Bundle SAFEs carefully. Don’t keep issuing them over many months without tracking their total impact. You could accidentally over-dilute yourself.

Actionable advice

• Always cap the SAFE. An uncapped SAFE is a recipe for regret.
• Keep a running list of every SAFE you issue, their terms, and how they’ll convert.
• Before you raise a priced round, run the numbers. Know exactly how much equity you’re handing over to past SAFE holders.

10. Post-Series A, venture capitalists often hold 25–35% of the cap table

Why this stat is important

After your Series A closes and the dust settles, venture capitalists usually own somewhere between a quarter and a third of your company. That might seem like a lot—and it is—but it’s also common.

This percentage gives them enough ownership to feel secure, help guide the company, and potentially block or approve major decisions.

What it means for you as a founder

You’re not in total control anymore. Depending on how your board is structured, VCs may now have veto power over fundraising, hiring/firing execs, selling the company, or changing your option pool. That doesn’t mean you’re powerless—it just means you need to understand how to manage investor relationships.

Also, keep in mind: 25–35% for one VC or fund is different than that total split across multiple investors. It’s usually healthier when multiple firms share that stake.

How to manage this ownership shift

• Negotiate board composition. Don’t automatically give every VC a seat. Limit how many voting members can be investors.
• Retain protective provisions. Founders should have rights too. Ask your lawyer about “founder-friendly” term sheets and clauses.
• Understand preferred stock rights. Most VCs buy preferred shares with special rights. Know what those are, how they affect your decisions, and how to negotiate them.

Actionable advice

• Don’t fixate only on valuation—look at the whole term sheet. Liquidity preferences and protective provisions can outweigh valuation benefits.
• Keep a founder-friendly attorney on speed dial. Don’t negotiate this round without one.
• Understand the long game. If you can grow faster with VC help—even if it means dilution—it might be worth it.

11. Founders typically retain 20–30% equity post-Series C

What this means in real life

After raising several rounds of funding, it’s not uncommon for founders to own only 20–30% of the company they started. It can feel jarring, especially when you remember you once owned 100%. But this level of dilution is fairly standard in the venture-backed world.

That remaining stake is still incredibly valuable—especially if your company is now worth tens or hundreds of millions. But it does mean your influence may be limited unless you’ve also retained key voting or board rights.

Why founder equity drops over time

Each funding round brings more investors. More investors means more shares issued, and those shares usually come from the pool you own.

In some cases, co-founders also split equity, so your personal slice might be even smaller than 20%. That’s why being thoughtful early on—about splits, pool creation, and dilution math—is so important.

How to hold your ground

• Limit early dilution. Every round builds on the last. The less you give away early, the more you keep later.
• Don’t over-grant equity to employees. Be generous, but smart. Use cliffs, vesting, and small grants for junior hires.
• Resist pressure to over-fundraise. Bigger rounds may sound sexy, but they come with more dilution. Raise what you need to hit goals and justify your valuation.

Actionable advice

• Be clear with yourself: Do you want to stay CEO long-term, or step back eventually? Your equity percentage affects how much power you’ll retain.
• Consider dual-class shares or voting agreements if you’re worried about losing control.
• Keep a long-term cap table forecast. Know where you stand today, and where you’ll stand after the next two rounds.

12. IPO-bound companies often see founder equity reduced to 10–15%

The final stretch to IPO

When your company is preparing to go public, the cap table is usually crowded. Between institutional investors, multiple VC funds, option pools, and employee equity, the founder’s slice can drop significantly—often down to 10–15%.

But don’t let that number scare you. If you’ve reached IPO, that 10% could be worth hundreds of millions. The key is to manage dilution early and make every point of equity count.

Why founder equity falls this far

The journey from startup to IPO can take 7–10 years and 4–6 funding rounds. Each time, you’ve given away a bit more equity. By the time you’re prepping for a public listing, there’s not a lot of room left for founders—especially if you started with multiple co-founders and issued a big employee pool.

Also, IPO prep usually comes with another funding round (Series D or E), and bankers may recommend changes to your structure to attract public investors.

How to make peace with it

• Focus on value, not just percentage. Owning 10% of a $1B company is better than 60% of a $10M one.
• Negotiate smart compensation. Public company founders often supplement their equity with salary and bonuses.
• Structure your exit terms wisely. Some founders maintain influence after IPO through dual-class shares or board positions.

Actionable advice

• Avoid unnecessary down rounds late in the game—they’re highly dilutive.
• Make your equity work for you: reinvest, diversify, or structure liquidity events as you scale.
• Always remember: dilution is a tool, not a penalty. It’s how you build something bigger than yourself.

13. Equity given to accelerators is typically 6–10%

What accelerators really offer

Startup accelerators like Y Combinator, Techstars, and 500 Global help early-stage companies grow faster through mentorship, resources, and exposure. In exchange, they usually take 6–10% of your equity—regardless of your valuation or traction at the time.

At first glance, that might seem expensive for a small investment (often $100K–$150K). But the real value isn’t in the cash—it’s in the connections, advice, and follow-on funding opportunities.

Why this tradeoff is often worth it

Accelerators give you access to investors who trust their brand. A startup accepted into Y Combinator, for example, often finds it easier to raise a strong seed or Series A round. That 6–10% equity may open doors that would take you months (or years) to open on your own.

You also get structure—weekly check-ins, rapid feedback, pitch prep, and access to founders who’ve been through the trenches. For many early-stage companies, that kind of support is game-changing.

When it’s not the right fit

Accelerators aren’t for everyone. If you’re already experienced, have strong traction, or have access to a great network, giving up 6–10% may not be worth it. Also, if you’re working on a niche product where mass mentorship isn’t helpful, an accelerator may dilute you without delivering impact.

Actionable advice

• Before joining an accelerator, talk to alumni. Ask what they got out of the program and what they’d do differently.
• Negotiate if needed. Some programs offer different tiers of involvement with different equity terms.
• Don’t join just for the money. If that’s your main goal, you can likely raise from angels or pre-seed VCs and keep more equity.

14. Bridge rounds can result in 5–10% dilution

What is a bridge round?

A bridge round is a type of interim funding. It’s called a “bridge” because it’s meant to carry your startup from one milestone to the next—typically between major funding rounds like Series A and B.

Bridge rounds usually involve raising a smaller amount of money (like $500K to $2M) quickly, often from existing investors or a small group of new ones.

Why they lead to 5–10% dilution

Even though bridge rounds are smaller, they still cost equity. If you’re raising with a convertible note or SAFE, you might be offering a valuation cap or discount that ends up converting into 5–10% of your company down the line.

In priced bridge rounds (less common), the dilution is even more immediate. You’re literally selling equity today at a set valuation.

When bridge rounds make sense

• You’re growing but not quite ready for Series B
• Your next product milestone is months away and you need to keep the lights on
• You’re in the middle of negotiations with larger investors but need more time

In all these cases, a bridge round can help—but it should be a short-term fix, not a long-term habit.

Actionable advice

• Keep the round small. The more you raise, the more dilution you take on.
• Be transparent with your investors. Show them how the bridge will get you to a bigger, better round.
• Negotiate friendly terms. Use caps that reflect your projected growth, and avoid heavy discounts if possible.

15. Equity set aside for the employee option pool usually amounts to 10–20%

Why you need an option pool

An employee option pool is a percentage of your company reserved for issuing stock options to future employees. These options help attract great talent—especially in the early days when you can’t offer big salaries.

Investors expect you to have one. In fact, during most fundraising rounds, they’ll insist on a pool that’s at least 10% of your cap table, sometimes up to 20%.

But here’s the catch: they often ask you to create or increase the pool before they invest, which means the dilution comes out of your share—not theirs.

How the math works

Say you’re raising a $5M Series A at a $15M pre-money valuation. Investors ask you to create a 15% option pool before the deal. That means your effective valuation drops to $12.75M, and your dilution increases.

The difference may seem small on paper—but over time, it can significantly impact your founder ownership.

How to negotiate the pool wisely

• Push for post-money pools. Suggest that any new pool expansion comes after the investor’s money hits.
• Negotiate pool size based on hires. If you only need 3–4 key hires, you may not need a 20% pool. Propose 10% and justify it with real hiring plans.
• Use vesting and cliffs. Standard four-year vesting with a one-year cliff protects the pool and avoids giving unearned equity to short-term employees.

Actionable advice

• Map out who you plan to hire and how much equity each role will get.
• Don’t over-grant to early employees. Junior roles should get small slices, while co-founders and VPs get more.
• Use tools like Pulley or Carta to track and manage your option pool over time.

16. In down rounds, dilution can exceed 25% in a single round

What is a down round?

A down round happens when you raise money at a lower valuation than your last round. It’s usually a sign that growth has slowed, investors have lost confidence, or the market has shifted.

Down rounds are painful—for your cap table, your morale, and your reputation. But they happen. And when they do, the dilution can be steep—often over 25% in one go.

Why dilution spikes in down rounds

Investors are taking more risk, and they want compensation for that risk. They also often push for additional protection like full-ratchet anti-dilution clauses or large liquidation preferences—both of which can deepen the hit.

Existing investors may also lose ownership unless they participate again, and you may be forced to refresh the option pool, which adds more dilution.

How to navigate a down round

• Be honest, not desperate. Down rounds don’t have to mean doom. Frame them as resets, not failures.
• Protect key stakeholders. Offer option refreshes to key employees who get hit hardest.
• Avoid punitive terms. Try to negotiate anti-dilution clauses that are weighted average instead of full-ratchet.

Actionable advice

• Explore alternatives first—bridge rounds, revenue-based financing, or strategic partnerships.
• Clean up your financials and build a turnaround story. Investors will want to see a path back to growth.
• Work with legal and financial advisors to minimize founder dilution through smart structuring.

17. Strategic investors often ask for 5–10% equity

What are strategic investors?

Unlike VCs who are purely financial investors, strategic investors are companies that invest in startups aligned with their industry. Think of Amazon investing in logistics tech, or Pfizer backing a healthtech startup.

These investors aren’t just looking for a return—they’re also thinking about synergy, partnerships, or future acquisitions.

Why they ask for 5–10%

Strategic investors often ask for a meaningful minority stake—usually between 5–10%—so they can influence the relationship without controlling the company. That equity gives them a seat at the table and the ability to negotiate terms, pilot programs, or technology access.

For you, it means cash plus industry credibility. But it also comes with strategic trade-offs.

When to say yes—and when to walk away

• Say yes if they bring clear benefits: revenue partnerships, customer access, or tech development.
• Be careful if they’re competitors. Giving a rival 10% of your company could spook future investors or customers.
• Negotiate guardrails. Limit their information rights, board access, or transfer rights to protect your independence.

Actionable advice

• Always clarify their expectations. Are they investing to learn, collaborate, or eventually buy you?
• Structure the round to avoid future conflicts. Set limits on how much they can invest or influence.
• Talk to other startups they’ve invested in. Find out how helpful—or overbearing—they really are.

18. Secondary sales in late-stage rounds may shift 5–8% equity away from founders

What is a secondary sale?

In late-stage rounds—Series C, D, or beyond—it’s common for founders or early employees to sell some of their shares to new investors. This is called a secondary sale. It’s not new money into the company, but a way for individuals to get liquidity.

These sales typically shift 5–8% of the company’s equity from founders or early employees to new investors.

Why it matters

Secondary sales give founders breathing room. After years of building, it lets you take some chips off the table—pay off debt, buy a home, or simply de-risk your life.

But it also reduces your stake. That 5–8% may not seem like a lot, but combined with dilution from the actual round, it adds up.

How to approach secondaries wisely

• Sell just enough. Don’t offload a large chunk—it can send the wrong signal to future investors.
• Structure it cleanly. Use your company’s legal team to ensure compliance and avoid friction with other shareholders.
• Know your rights. Your shareholder agreement might restrict how and when you can sell.

Actionable advice

• Talk to your board early. Get their blessing before negotiating any secondary sales.
• Cap the total secondaries in the round to maintain balance between liquidity and ownership.
• Be strategic—use the cash to de-risk your personal finances so you can stay all-in emotionally.

19. Investors prefer ownership of at least 15–20% post-investment in early rounds

Why this range matters to investors

Early-stage venture investors often target a minimum of 15–20% ownership when they invest in a startup. This isn’t just about control—it’s about economics. Investors know that not all of their portfolio companies will succeed, so when one does, it needs to deliver big returns to offset the losses.

A 15–20% stake means that if your company becomes a unicorn or exits for a few hundred million, their return is meaningful. Anything less may not move the needle enough.

How this affects your round

If an investor wants 20% ownership and your valuation is $5M, they’ll want to invest about $1.25M. If you try to raise less but still want the same valuation, you’ll often run into pushback.

Investors may also pressure you to keep the option pool outside of their dilution, which further eats into your share. Knowing this helps you frame your ask and structure your round more strategically.

How to negotiate and plan

• Start with what you need. Don’t design your round around what investors want. First figure out how much money you need to hit your next milestone, then determine the right valuation to minimize dilution.
• Use investor expectations to shape your pitch. If you’re raising $2M and offering only 10%, it might not resonate with early-stage VCs. Make the offer align with their return needs.
• Target the right investors. Micro-VCs or angels might be comfortable with smaller percentages. Larger funds generally want more ownership to justify their time and capital.

Actionable advice

• Use the 15–20% expectation to reverse-engineer your valuation and round size.
• Cap the investor’s control by balancing their stake with protective provisions—not just board seats.
• Keep optionality. If one investor wants 20% but others will take less for strategic involvement, consider a syndicate that balances economics and support.

20. Non-dilutive funding retains 100% founder equity

What is non-dilutive funding?

Non-dilutive funding refers to capital you raise without giving up any equity. This includes grants, revenue-based financing, loans, and sometimes government incentives. Unlike equity rounds, you keep full ownership—and control—of your startup.

It’s not free money. But it is money that doesn’t cost you shares.

Why this option is often overlooked

Many founders chase VC funding because it’s popular and high-profile. But non-dilutive funding can be smarter in early stages, especially when you haven’t proven product-market fit yet.

You get money to grow without giving away part of your company at a low valuation. That’s a win—if you can qualify for it.

Where to find non-dilutive capital

• Grants: Government agencies, universities, and foundations offer startup grants. They’re often aimed at specific sectors like health, climate, or education.
• Revenue-based financing: You raise cash in exchange for a share of future revenue—usually a percentage until a cap is reached.
• Loans: Some banks or alternative lenders offer business loans, especially with recurring revenue or assets.

Actionable advice

• Apply for every grant you qualify for—it’s slower, but often worth it.
• Consider RBF providers like Clearco, Lighter Capital, or Pipe if you have predictable revenue.
• Use non-dilutive capital to delay your equity round and boost your valuation later.

21. Crowdfunding rounds average 5–10% equity sold

What is equity crowdfunding?

Equity crowdfunding allows startups to raise money from hundreds (or thousands) of small investors through platforms like Republic, SeedInvest, or StartEngine. Instead of just VCs or angels owning a piece of your business, your supporters become investors.

You’re usually giving up 5–10% equity in the process.

Why founders choose this path

Crowdfunding isn’t just about money—it’s also about community building. When your users become shareholders, they turn into brand advocates. Plus, it’s a great marketing opportunity and often boosts product visibility.

For consumer-facing startups or mission-driven ventures, it can be a powerful tool.

What to watch out for

• Cap table complexity: Hundreds of investors can make future rounds trickier. Most platforms use SPVs to group them into one line on your cap table, but it’s still something to watch.
• Compliance and paperwork: Crowdfunding campaigns require legal filings, disclosures, and often an audit. This takes time and money.
• Valuation pressure: You must set a valuation. If it’s too high, you may scare off investors. Too low? You hurt your future rounds.

Actionable advice

• If you’re raising $1M–$5M and want to build a brand army, this can be a great route.
• Work with legal advisors to set a clean structure. Use an SPV or crowd note when possible.
• Market the campaign aggressively. Most success stories are heavily promoted before launch.

22. Unicorn companies usually see cumulative founder dilution of 60–80%

What happens on the road to $1B?

Reaching unicorn status—a $1B valuation—usually means a startup has raised multiple large rounds. Series A, B, C, D, even E and beyond. Each round brings in new investors, refreshes the option pool, and pushes founders further down the cap table.

That’s why most unicorn founders own only 10–20% of the company by the time they hit the billion-dollar mark. Their cumulative dilution often totals 60–80%.

Why it’s not necessarily bad

Yes, that’s a huge reduction from 100%. But it’s also the price of building something massive.

Ownership isn’t everything—value is. A founder with 10% of a $1B company owns $100M worth of equity. That’s life-changing. And if they’ve structured the board, voting rights, and compensation well, they can still lead the company with confidence.

How to plan for it early

• Track dilution every round. Know your stake at every stage—and how future rounds might shrink it.
• Avoid over-fundraising. Just because you can raise $100M doesn’t mean you should. Every dollar comes with a dilution cost.
• Think about control. Use founder-friendly tools like dual-class shares or board controls to protect your vision.

Actionable advice

• Don’t compare your ownership to others—compare your value.
• Work with financial advisors to diversify your personal holdings once the company grows.
• Prepare for an exit or liquidity event while still in control. Don’t wait until you’re down to 5%.

23. Founders of YC-backed startups often give up 7% equity upfront

YC’s standard deal

When a startup joins Y Combinator, they give up 7% equity in exchange for YC’s standard investment, mentorship, and access to Demo Day. As of recent updates, YC typically invests $500K in total—with $125K for 7% equity and the rest via SAFE.

This is fixed and not negotiable. It’s part of their brand—and their bet on early founders.

Why founders say it’s worth it

That 7% isn’t just for money—it’s for access. YC-backed founders often raise much larger seed rounds, command higher valuations, and benefit from an instant network of top-tier talent, advice, and investor attention.

In many cases, that 7% trade-off gives founders more leverage later, which reduces dilution overall.

How to think about the trade

• Are you early enough? YC adds the most value in the early stages—pre-product or early MVP.
• Do you need the network? If you lack access to investors, mentors, or hiring channels, YC fills that gap fast.
• Can you make the most of it? YC is intense. If you’re not ready to sprint for 90 days, it may not be the right fit.

Actionable advice

• If accepted, treat YC like a startup bootcamp—use every resource.
• Don’t raise right after Demo Day unless you need to. Use the momentum to negotiate a better round.
• Build lifelong founder connections while there. Many of your most valuable business allies may come from that cohort.

24. Liquidation preferences can impact effective dilution by 5–15% more

What are liquidation preferences?

A liquidation preference is a clause in a funding deal that guarantees investors get paid back before anyone else when the company is sold or goes public. The most common type is a 1x non-participating preference—which means the investor gets their money back (1x) before proceeds are split among all shareholders.

But some deals have multiple preferences (2x, 3x) or participating preferences, which can drastically reduce what’s left for founders and employees.

This isn’t dilution in the traditional sense, but it’s economic dilution—you get less of the pie, even if your ownership percentage looks good on paper.

How it adds up

Imagine you sell your company for $50M. If you raised $30M on a 2x participating preference, your investors could take $60M before you see a dollar—even if you technically still “own” 20%.

In scenarios like that, your effective ownership might feel more like 5% than 20%.

How to avoid the trap

• Push for 1x non-participating. This is the most founder-friendly and industry-standard.
• Cap participating preferences. If you agree to one, make sure there’s a ceiling—like 2x the original investment.
• Read the fine print. Preferences often hide in legalese. Ask your lawyer to flag anything unusual.

Actionable advice

• Always model exit scenarios to understand the real impact of preferences.
• Don’t trade a higher valuation for worse terms. Sometimes a lower valuation with clean preferences gives you more value long-term.
• Discuss preferences upfront during term sheet negotiation. Don’t wait until closing day to clarify.

25. Median equity given to advisors is 0.25–2%

Why advisors are worth the equity

Startup advisors can be incredibly valuable—especially in the early stages when your team is small and your experience limited. They can open doors, give expert guidance, prevent costly mistakes, and make warm introductions that matter.

But they don’t work for free. Equity is the standard form of compensation for startup advisors, and the typical range is 0.25% to 2%, depending on the advisor’s involvement, experience, and timing.

When to grant what

• 0.25%–0.5%: For occasional check-ins or low-involvement roles.
• 0.5%–1%: For advisors who meet monthly and actively support one aspect of the business (sales, marketing, legal).
• 1%–2%: For deeply involved experts—ex-CEOs, top investors, or domain leaders.

These grants usually vest over 1–2 years, and some include a cliff to ensure commitment.

How to avoid over-granting

• Use an Advisor Agreement. Set expectations, responsibilities, and vesting clearly.
• Track advisor equity like employee equity. They impact your cap table and need to be modeled accordingly.
• Don’t stack too many advisors too early. One or two strategic, hands-on advisors can be more valuable than a whole advisory board on paper.

Actionable advice

• Consider starting with a three-month trial before granting equity.
• Ask for results—not just titles. Your advisor should be delivering tangible value.
• Don’t be afraid to renegotiate. If an advisor becomes inactive, pause or cancel future vesting.

26. Founders in heavily competitive sectors may give up 5–10% more than average

Why competition drives dilution

If you’re in a hot space—like AI, crypto, or climate tech—you’re not just pitching investors. You’re competing with dozens of other startups pitching the same people, often with similar ideas.

In these environments, investors know they have the upper hand. They may demand more equity for the same check, push for tougher terms, or insist on bigger option pools. That leads to 5–10% more dilution than normal.

How to counter this dynamic

• Differentiate like crazy. Show what makes your approach, team, or business model unique. Investors reward differentiation.
• Use milestones to boost valuation. Hit traction goals, key hires, or revenue benchmarks before raising. It gives you more leverage.
• Talk to multiple investors. In competitive sectors, casting a wide net helps create fear of missing out—and better terms.

Actionable advice

• Run a targeted investor outreach campaign. Don’t wait for intros—send cold emails with traction and clarity.
• Delay fundraising if possible until you have a standout metric. Even one key partnership or $10K MRR can swing a deal.
• If you must accept dilution, negotiate better control terms in return.

27. Pre-money valuation impact on equity can vary 10–20% per round

Why pre-money valuation matters so much

Your pre-money valuation is the value of your company before new money comes in. It determines how much equity you’re giving up in a round. A small shift in valuation can change your dilution significantly—often by 10–20% or more.

Say you raise $2M at a $6M pre-money valuation. That means investors get 25% of your company. Raise the same amount at $8M pre, and they only get 20%.

That’s a 5% swing in your ownership—just from a higher pre-money number.

How to raise at a better pre-money valuation

• Build traction. Monthly recurring revenue (MRR), user growth, retention—these drive valuation.
• Reduce risk. Investors pay more when risk is lower. Show that you’ve de-risked your product, market, or go-to-market motion.
• Leverage competition. Nothing drives up valuation like multiple term sheets.

Actionable advice

• Track your company’s KPIs and time your fundraise around key jumps.
• Practice your valuation narrative: Why now, why you, why this market?
• Ask for pre-money valuation, not post-money. It gives you better control over dilution and option pool setup.

28. Dilution from anti-dilution clauses can range 5–15% in unfavorable terms

What are anti-dilution clauses?

Anti-dilution clauses are designed to protect investors if your company raises a future round at a lower valuation. There are two main types:

• Weighted-average (fairer)
• Full-ratchet (punishing)

In worst-case scenarios, these clauses can result in 5–15% unexpected dilution for founders and common shareholders—even if you’ve already given up significant equity.

How they impact your ownership

Let’s say you raised at a $20M valuation, then raised again at $10M. If your last investors had full-ratchet protection, their ownership would adjust as if they’d invested at the lower $10M valuation. That means more shares for them—and fewer for you.

Even weighted-average formulas can result in dilution, especially if a lot of capital is raised at lower valuations.

How to protect yourself

• Negotiate for weighted-average protections only.
• Cap the impact. Put limits on how much ownership can be adjusted downward.
• Use carve-outs. Exclude specific rounds or investors from triggering anti-dilution adjustments.

Actionable advice

• Always get a lawyer to review anti-dilution clauses before signing.
• Know the downstream math. Run simulations on different future valuation scenarios.
• Don’t trade clean terms for hype. A flashy investor with aggressive terms can cost you far more later.

29. Series D+ rounds see less dilution, typically 3–8%, due to higher valuations

What changes in later rounds?

By the time you’re raising a Series D or later, your company likely has strong revenues, a large team, and product-market fit. Investors are no longer betting on a maybe—they’re investing in scaling and exit.

Because of that, your valuation is much higher. Raising $50M at a $1B valuation only costs you 5% dilution. That’s why dilution in later rounds is typically 3–8%.

Why that’s a sign of success

You’ve de-risked your business, which means you can raise more money without giving up more equity. That allows you to retain control, motivate your team, and prepare for IPO or acquisition without massive ownership changes.

How to make the most of it

• Don’t overraise. More money means more pressure to grow fast, which can backfire.
• Preserve cap table cleanliness. Don’t bring in investors who might complicate an eventual exit or IPO.
• Be selective with investors. Look for firms that can help you go public, scale globally, or access new verticals.

Actionable advice

• Use Series D+ rounds to invest in infrastructure, operations, or M&A—not survival.
• Treat dilution here as a tool to multiply growth, not a necessary evil.
• Prepare the business for IPO standards: audits, forecasts, compliance, and internal processes.

30. Cumulative dilution past five rounds can exceed 70%, depending on capital strategy

The compounding cost of capital

When you raise five or more rounds, even small amounts of dilution in each can add up. Between seed, Series A, B, C, and D, you may end up giving away 70% or more of your company.

This isn’t inherently bad—many massive startups have followed this path. But it means you need to manage dilution like a financial strategy, not a side effect of fundraising.

Why this happens

• Early rounds take more equity because risk is high and valuations are low.
• Later rounds take less—but they still dilute you.
• Option pools and advisory shares add silent dilution over time.

Each round compounds the previous one. A founder who gave up 20% in Seed, 25% in Series A, and 10% in B is already down to 54% ownership—not including SAFEs, notes, or pools.

How to stay in control

• Cap dilution per round. Aim to keep it under 20% per round when possible.
• Use capital efficiently. The less often you raise, the less you dilute.
• Keep ownership dashboards. Model dilution ahead of every raise to guide your decisions.

Actionable advice

• Don’t treat each round as a silo—build a long-term cap table strategy.
• Stay involved in option pool decisions to protect both ownership and motivation.
• Remember that control is about more than shares—board seats, voting rights, and governance matter just as much.

Conclusion

Raising capital is an essential part of growing a startup, but it comes with a cost—equity. If you manage dilution strategically, you can build something massive and still maintain ownership, control, and financial reward.