Hossain: Early venture rounds cause ~30% dilution via investors and option pools
Nadim Hossain · 856 SaaS: How Brightfunnel CEO Replaced Himself After Hitting $2m+ ARR, 45 Employees · Nov 27, 2017 · at 11:33
BrightFunnel founder Nadim Hossain explains the standard mechanics of startup dilution across venture capital rounds.
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“In every round, you know, think of it as a 30% dilution event because your investor is you know, they want to own a certain percent of their company. That's usually about, you know, again, people give ranges of the series A level about they want to own 20% after, you know, after they invest. You've got to create an employee option pool. You're going to hire a bunch of people. So that's going to take, you know, 10 to 15% depending on how much money you're raising, how long it's going to last, and how many people you already have on board. So those are the two big things that are going to cause dilution the investors and the employee option pool”
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