SAFE Dilution Is Highly Sensitive to How Much You Raise

For founders signing SAFEs before year end: how much of your company should you expect to sell?

Two things stand out from this data (which is aggregated from 2,400+ startups like yours that raised on post-money SAFEs so far in 2024):

1. The dilution is 𝗵𝗶𝗴𝗵𝗹𝘆 sensitive to the round size. You'll generally sell more of your company in percentage terms for a higher amount of cash.

2. The ranges are wider in SAFE rounds than we typically see in priced rounds. Basically deals are getting done at a bunch of different price points.

A lot of the variation is inherent to the early startup market. A repeat founder with a couple exits building "something new" is likely to be able to raise more capital for less dilution than a first-time founder. Is this fair? No. Is this happening? All the time.

Circles in the chart below show the percent expected dilution for a given round size. We say expected because of course SAFEs don't actually convert until the following priced round (which is also why this shows post-money SAFEs only).

𝗗𝗶𝗹𝘂𝘁𝗶𝗼𝗻 𝗧𝗮𝗯𝗹𝗲

Angel Rounds

• Raising under $250K = 3.2% median expected dilution

• $250K-$499K = 7.1% median

Pre-Seed

• $500K-$999K = 11.2% median

• $1M-$2.4M = 17.2$ median

Seed & Above

• $2.5M-$5M = 22.1% median

• $5M+ = 21.7% median (interesting that this is below the prior category)

The naming conventions by round size (angel, pre-seed, etc) are my take on the best way to distinguish these different rounds. You may feel differently - and pre-seed in particular is defined in lots of different ways across startupland.

Hopefully these data can set the table for more fruitful fundraising discussions as we race towards the end of the year.

Good luck fundraising!

#startups #SAFEs #fundraising #founders #preseed

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