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After funding, the founders may be only high single digits themselves. wow, this is normal? I guess when you're playing flip-lottery you don't care.
by nazgulnarsil 17y ago
After funding, the founders may be only high single digits themselves.
wow, this is normal? I guess when you're playing flip-lottery you don't care.
- tptacek 17y ago4 equal cofounders + an employee pool, pre-funding, and you're already in low double digits. Now give half the company to financiers. Twice.
- pg 17y agoFred Wilson's post on this is the best source: http://www.avc.com/a_vc/2009/02/founder-dilution-how-much-is-normal.html http://www.avc.com/a_vc/2009/02/founder-dilution-how-much-is... If by "flip" you mean sell the company quickly, it would actually be a different story. VCs wouldn't fund you if that was what you wanted to do, so if you raised money it would be a smaller amount, from angels, and there would be much less dilution.
- nazgulnarsil 17y ago10-20% doesn't sound nearly as bad as single digits. partially psychological I suppose.
- netcan 17y agoThe post suggests 20%/25%/60% for founders/management team/investors is a typical outcome. I assume that employees take their share from the 25% management and that it typically isn't very big. It would be interesting to know what an average employee stock option at a start-up is ultimately worth discounted to the time when it's earned.
- pg 17y agoThat kind of split is what you'd get if a company became really big. So it's more an ideal outcome than a typical one.