Dilution by Sam Altman

TL;DR - Founders should not forget their purpose when fundraising through equity.

Helpfulness - 4

Topic Tags - Dilution, equity funding, founder advice, change in VC

Questions answered:

  • How much money should a founder raise from equity?

Summary:

  • Early fundraising used to be hard, not so much anymore. Lots of money looking to be invested in private companies (tech), leading to higher evaluations and funds raised.
  • “Choosing to raise less helps protect their ownership more than negotiating valuation does.” Founders should only raise what they need each round, selling 10-15% equity for seed and 15-25% for series A. Combined Founders should try to sell less than 30% of their company.
  • Raising lots of money is not a success, instead, it may lead to a company’s failure.