How Much of Your Company Do You Sell in a SAFE Round

Founders - how much of your company will you sell in a SAFE round?

As the world has shifted to using the post-money SAFE as the standard way to fundraise at early startups, we can now get a good sense of how much of the company equity is going out the door.

Data comes from over 2,000 US companies raising on post-money SAFEs in 2023. Only including post-money as pre-money SAFEs are dependent on future events.

Key point - dilution rises as round size increases !

Here's the breakdown:

𝗥𝗮𝗶𝘀𝗲 𝗼𝗳 𝘂𝗻𝗱𝗲𝗿 $𝟮𝟱𝟬𝗞

• Founders sell about 1% of the company in such raises

• Up to 3% or so on the higher end

$𝟮𝟱𝟬𝗞-$𝟰𝟵𝟵𝗞

• About 5% of the company is sold (say a $300K raise on a $8M cap)

• 7% on the high end, 3% on the low end

$𝟱𝟬𝟬𝗞-$𝟵𝟵𝟵𝗞

• Median of 8% sold

• 5%-11% as the range

$𝟭𝗠-$𝟮.𝟰𝗠

• Median of 14% sold

$𝟮.𝟱𝗠-$𝟰.𝟵𝗠

• Median of 18% sold

$𝟱𝗠+

• Median of 19% sold

The dilution entailed in the larger rounds are a major reason why folks consider those "seed" rounds. Typically founders sell 20% in a priced seed, which aligns very closely with the $2.5M + rounds on SAFEs.

Now many founders will raise multiple "rounds" on SAFEs, if a round is defined by SAFEs signed at different valuation caps.

If you raise a friends & family of $200K (congrats on your amazing friends / fam) and then another $600K or so from a pre-seed fund, that's already 10% of your company sold. So jumping through a priced seed and then a Series A, this founding team is approaching 50% dilution after the A round.

Fundraising in this manner is always a balancing act between dilution on the one hand and capital needs on the other. Hopefully this gives founders a bit more of a baseline to rightsize their own raises!

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#cartadata #fundraising #founders #startups #SAFEs