Questions

How much equity do first round investors typically want?

I thought 5% to 7% of equity is more than enough for an investor in a startup that has the potential to be the next Facebook, Amazon or Google? I was reading earlier where investors want 10% to 15%? That seems high. When you look at what other VC’s have asked for with companies such as Facebook, Google, etc

3answers

Typical pre-seed (100-500k) is 5-15%
Seed (500k-2M) is up to 25%
And over depends.

The "potential of the next FB...." is just that, a potential. Don't fight over equity early but make sure you never give up more than 15%, don't offer board seats too early and no "right of first refusal" or "right of next round lead"


Answered a year ago

Just remember equity is a form of value exchange, always remember if you don't like the numbers you hear, negotiate. Sometimes, you don't know what you can get if you don't ask, that goes for both parties. However, since you do not have a product and don't have real numbers, even small-scale, your risk perception is likely very much higher, so to an investor coming in their money, currently (high value) versus equity in your company at current stage(high risk), equal a higher equity percentage, due to value perception. Risk/Reward factor! Reach out to me if you need more help


Answered a year ago

"Potential" is a very common word that investors hear. The amount of equity an investor would want depends on the stage you are at. If you have built something and proven the model then you have the ability to negotiate harder and get a fairly good deal. But if you are looking to raise money with just a set of wireframes investors will need a bigger piece of the pie.


Answered a year ago

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