Funding Round Dilution : 20% or less

What's market for funding round dilution? In other words, how much ownership are startups giving to investors per funding round, and won't raise eyebrows? It seems to...

20% or less (for Seed)

I remember chatting with an 'old school' investor who proudly mentioned that they were able to negotiate a 60% ownership in a seed round investment. Its hard to imagine a scenario where this could make sense and its definitely not market.

Let's look at some publicly available data on this.

Peter Walker from Carta published the following data (2023) that shows the Median and distribution of dilution per round. It starts with Seed with a median of 20.5% and trending down as the round progress.

But the caveat is that this data is based on 'priced rounds' meaning that it does not include non-priced rounds- investments that have been done with SAFEs or Convertible Notes. The seed round dilution of 20.5% would include '(agreed) dilutions from previous rounds that took effect + priced seed round dilution'.

An article (2019) from Sebastian Quintero at Radicle which is based on 8,639 funding rounds from Crunchbase, show that the dilution rates seem to generally decrease as the round progresses (Angel -> Series) but with the exception of preseed/angel rounds. You can see the median for Angel rounds being around 10% at start, move down and shoot up for Series A, and trend down after. (below)

So, if the expected dilution of your funding round is more than 20% than its worth taking another look.

Some other resources / data points

• 10-25% for Seed : Reddit post (with good analysis)
• If you can manage to give up as little as 10% of your company in your seed round, that is wonderful, but most rounds will require up to 20% dilution and you should try to avoid more than 25% - Y Combinator library
• Ideally, founders should aim for a dilution of 15-20% per funding round and strive to retain 50-60% ownership in the company by the time they close a Series A round - Flyerone.vc