The amount of dilution early-stage startups now take (to be fair, for lots of capital) feels like malpractice on the part of investors. Founders don't understand how much it hurts them to have sold >50% of the company after their pre-pre-seed, pre-seed, seed, and A.
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Isn’t that just a function of round naming conventions and the slippage there? If you just look at the $ raised and called the “Series A” round a Series B or C, 50% total dilution doesn’t seem egregious
Yes, this is true to some extent. Although it's still a problem if the percentage investors buy in these later rounds is too large.
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The interesting thing to see would be the trend in founder/employee ownership at IPO. I’m not sure that’s lower now than it has been historically. More VC $ raised doesn’t seem to correlate w lower equity ownership (presumably because those companies raise at higher valuations)pic.twitter.com/AgXGQcAfVq
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There could be a strong confirmation bias at play though. Companies that make it to IPO are exceptional by definition.
End of conversation
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