For a new startup, what would be the “acceptable” equity percentage given to VC (Series A financing)? by @R44D
Answer by Raad Ahmed:
As you can see from the other answers, there’s a bit of a range here. And it’s true that as a startup, you may have some difficulty attracting a VC in the first place. If you do, be prepared to let go of anywhere from 30–45%. Startups are risky investments for VCs and they will require a hefty return in order to make it worth their while. It may also not be in your best interest to give away so much equity at this point, especially because there are other investment options available. I would encourage you to weight the pros and cons of receiving a large sum from a VC and losing a substantial amount of your equity in the process. Is it worth it?
As another answer pointed out, you could always seek funding from an angel investor. Sure, the amount of investment will likely not be as high, but neither will the equity percentage that you provide them. Plus, angels are usually a bit more hands off than VCs which may be nice as you will remain more in control of the development and decision-making. It’s really a balancing act that will come down to what’s in the best interest of the business—not just today, but into the future.
I would encourage you to seek the advice a startup attorney. Discussing the specifics of your situation with a seasoned professional will help you reach the best option for your business.is happy to connect you with a quality startup attorney that can help you at various stages of your business. Check out our website and get in touch for a consultation.