Kinda stunned at how much more founder-friendly Series A has become.
Chart below shows the median dilution (eg how much of the company is sold to investors) in a primary Series A round in the US.
In basically every industry, founders are selling less of their companies to Series A investors than ever.
In 2020, the median round for Biotech Series A saw 40% of the company sold to investors. So far this year, founders are only parting with 24%.
That's a massive difference!
Other industries show declines as well, if not as dramatic as the hard sciences.
So - why is this happening?
𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 𝗿𝗲𝗮𝘀𝗼𝗻𝘀
1. The professionalization of venture. As more funds and investors come into early-stage VC, the market has standardized around a lower investor allocation figure.
2. The expansion of dilution pre-Series A. So this is perhaps the negative view, which is there is much more fundraising happening before the A these days. Investors want founders to be properly incentivized to build a major business - so they take less.
I'm sure there are many more reasons I'm not thinking of - would love your feedback here!
In any case, if you're raising a Series A - I know it's tough. But hopefully this is a silver lining in what is likely to difficult fundraising moment.
#cartadata #dilution #SeriesA #founders #fundraising
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