How much of my company will I own after raising?

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Dilution compounds, it does not accumulate. If you sell 20 percent of the company in a round, you keep 80 percent of whatever you had. Do that four times and you are left with 80 percent of 80 percent of 80 percent of 80 percent, which is about 41 percent, not the 20 percent you would get by subtracting four twenties from a hundred. This is the single most common arithmetic mistake founders make about their own cap table, and it runs in the optimistic direction, which is why it survives so long. What a normal path looks like A company that raises a pre-seed, a seed, a Series A and a Series B, selling somewhere between 15 and 22 percent each time, has founders holding around 40 percent of the fully diluted company at the end of it. Split between two founders that is roughly 20 percent each. Add the option pool, which is typically 10 to 20 percent by that stage and is refreshed out of the existing holders at most rounds, and the founders are nearer 30 percent together. Those are medians, and the spread around them is wide. A company that raises once more than planned, or raises a large round at a modest valuation, lands somewhere quite different. The arithmetic is not in doubt; which numbers to put into it is. Ownership is not the same as proceeds Owning 40 percent of a company does not mean receiving 40 percent of what it sells for. Investors hold preferred stock, which is paid before common stock, so the money raised comes off the top of the sale before the founders and the employees see anything. On a sale that comfortably exceeds everything raised, the preference stops mattering and everyone takes their percentage. On a sale that does not, the founders can own a large share of a company and receive very little of its sale price. This is why the amount raised matters twice. It dilutes the founders on the way in, and it sits in front of them in the queue on the way out. Two companies with identical ownership tables and different amounts raised have genuinely different outcomes at the same sale price. What to do about it Model the whole path rather than the round in front of you. Put in the rounds you expect to raise, at the valuations you think you can get, and look at what the founders hold at the end and what they are paid at a realistic sale. Then change one thing at a time. Raising less, raising at a higher price, and raising one fewer round all move the answer, and they do not move it by the same amount.

How much of my company will I own after raising?

What a normal path looks like

Ownership is not the same as proceeds

What to do about it

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