Founders: here's how much of your company investors are asking for.
Data from 3,368 rounds raised by US startups on Carta so far in 2024.
Of course founders typically sell less equity in later rounds (as the business is much more established). But even within a single round like Series A, the gap between primary and bridge round dilution is quite wide.
𝗞𝗲𝘆 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀
75th percentile for primary Seed and Series A is around 25%. Deals with 30% or more dilution are rare.
The 20.4% median in primary seed rounds does not take into account the conversion of SAFEs or Convertible Notes (which is the usual route for pre-seed cash).
Pretty high median dilution in bridge seed rounds. A bridge after a seed round can either be great (an investor wants to pre-empt the A) or pretty bad (struggling company looking for a lifeline). So the distribution is all over.
Many founders want to exit the Series A round maintaining majority control of the business. At 20% seed + 20% A + 8-10% pre-seed...that gets tricky!
Deep tech sectors like Biotech and Hardware typically see dilution more towards the upper end of the ranges; standard SaaS is more the median.
Dilution matters, but so do deal terms. Good to see liquidation preferences over 1x remain uncommon for Seed and A (less than 5% of deals). They are popping up more frequently in B and C however, especially in bridge rounds.
This data doesn't look at "seed on SAFEs" but the median sold in a $3M SAFE round is 20.5% (which matches almost exactly with the dilution for a priced seed).
Obviously, each round is a unique negotiation between the founders and investors. Founders want to hold on to a significant stake in the company they've created - and investors need a certain allocation in order to for their fund economics make sense.
Hopefully these benchmarks help set the terms!
Give me a shout in the comments if you want this same graphic filtered to a specific industry.
#startups #founders #dilution #venturecapital #fundraising
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