While each company and its circumstances are unique, there are some guidelines to consider regarding the usual percentage of shares that get sliced off in Seed, Series A, and Series B rounds. Certainly, much depends on the valuation and other variables that an attorney will discuss with you.
Founders start with 100 percent ownership. Seed rounds – the earliest stage of funding, usually from family and angel investors – typically dilute founders’ ownership by an average of 15%. By the time you reach the Series A stage, you need to be prepared for further dilution. Series A investors are usually funders who provide venture capital for emerging companies. Since their funding typically exceeds $2 million, their percentage of ownership can be as high as 50%.
If you get to the Series B round, expect a dramatically different mindset from earlier funders. Whereas Series A and seed investors believe in your vision and have bought into the prospects of your company, those in Series B want to see that you’ve successfully progressed and satisfied important milestones. They typically see about 33 percent ownership, which will dilute all previous ownership percentages.
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