Founders: how much will you own?

Founders how much of your own company are you gonna own if you raise venture capital Let's get into the data A lot of people are gonna be surprised to hear that the median ownership for founding teams at Series A is 35.6% Yes People don't realise how much of the company founders are selling to get through pre seed seed Series A Now it's important to remember that a Series A today the median is $12 million And you might have raised a two million dollar pre seed a four million dollar seed you might be doing five to eight million dollars in revenue So it's not like a Series A in the 90s when it was brand new and that was the first round companies that have raised a lot of money at the same time 35% is a minority of your business By the time you're getting to Series D which is typically the last round before you IPO or get acquired founders are owning about 10% of the business Now people might say that's really low that's nothing But you have to remember companies that have made it to that point are worth billions and billions of dollars And the whole point of going on this journey of raising outside capital and raising all of these rounds is to grow the pie so that your smaller percent is worth more of a bigger thing versus having a smaller pie Right So the idea is that you're using this outside capital to grow something bigger and more valuable But obviously that's not always the case And founders are making trade offs owning less of their businesses with the hopes of having these really really big outcomes Now that doesn't always happen and we're hearing a lot about companies that are getting acquired and the founders own very little or they're getting crammed down through things like liquidation preference and the founders are walking away with nothing And that's a really tough outcome which is why I say only raise what you need to raise I really love the new trend of seed strapping where people are raising one to let's say $4 million and getting profitable and growing on that That allows the founders to retain ownership in their business and it allows the pre seed investors to retain ownership in the company which we love So capital efficiency is still king Capital efficiency can help you hold on to your business So be real about the amount that you're gonna have to sell in order to go on this growth trajectory and make sure that you understand that there's a lot of upside But it also comes at the sacrifice of a lot of ownership As always I love this data from Carta They have more than half of the US's startups on their platform So it's really the source of truth for what's really going on in cap tables and that's where the rubber meets the road when it comes to ownership