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For many startups, there's an early round that's friends, families, and angel investors. It tends to be a small enough round that VCs (aka "institutional invest
by Ozzie_osman 5y ago
For many startups, there's an early round that's friends, families, and angel investors. It tends to be a small enough round that VCs (aka "institutional investors") can't or won't participate. Individuals can write smaller check sizes, and can invest with less friction especially if they know the founders well and/or are really passionate about the space the startup is in and the problem it's solving.
That said, yes, angels will invest along side VCs in seed rounds and even further along. But when someone says "angel round" they're usually talking about a very early, small round composed mostly or entirely of individuals.
- c_o_n_v_e_x 5y agoHow much equity is one expected to be giving up in these early rounds (angel, pre-seed, seed)? I was speaking to someone yesterday and they had mentioned 20% per round is a rule of thumb. This in Asia so not sure if the rule of thumb is correct and or whether it's different in other geos.
- enra 5y agoDepends, but generally for proper seed or A rounds 20% dilution is common but for pre-seed I would do less, 5-15%. Also to note that it doesn’t mean you give out 20% ownership each round but each round dilutes existing shareholders by 20%. All depends how much you actually need to raise and what kind of valuation you are able to get.