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How much dilution should I take on a Seed round?

In the process of raising a Seed round of funding. Any guidance on the

amount of dilution that I should expect and what are also market accepted terms?

5 Replies

Shams Juma
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Shams Juma Entrepreneur
Founder
20 - 35% is generally the range of dilution per round of funding.
Zhenya Rozinskiy
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Partner at Agile Fuel
One choice you may have is to do the seed round using either convertible notes or SAFE and not worry about dilution until later
Donavon Urfalian
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Donavon Urfalian Entrepreneur
A.I. Engineer / Entrepreneur / Founder & CEO @ Umazed / Kodo Startups
It depends. Actually, in my experience, 20-25% is the norm. Here is a typical example. X VC company evaluates or values your company at 8 million pre. Pre meaning before they give you money in exchange for equity/shares/preferred stalk, they value you it based on their research. Then let's say they give you 2 million in exchange for equity/shares, then out of thin air, your company issues them those shares. So Post evaluation your company is worth 10 million. Basic math. 8 pre 10 post 2 million in seed funding, in this example you give up 20% equity in exchange for 2 million. That's as basic as an explanation as it gets. There is an option pool, but you can argue to keep it between 10-15% if you or a team member is going to be the CEO/CTO or C level.
Thomas Duffy
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Thomas Duffy Advisor
Telehealth365
i believe that the first step is to see what the market size of the company the money needed to get to the next level and put together a plan
Mike Moyer
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0
Mike Moyer Entrepreneur • Advisor
Managing Director at Lake Shark Ventures, LLC
Don't put a valuation on your company unless you're raising enough money to meet all your expenses in the foreseeable future.

Smaller amounts of money should be raised using convertible notes/SAFEs as mentioned above.

For early participants, use the Slicing Pie equity model.
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