Fundraising & Investors

How much dilution should I expect across seed and Series A?

A starting point

Plan for roughly 10-20% dilution per priced round plus the option pool, and remember that stacked SAFEs at different caps all convert at once and can add up faster than you expect. Keep a running cap table model so you see your ownership after the next two rounds, not just today. Dilution you didn't model is how founders wake up owning single digits.

Go deeper

Hand-picked from around the web, each with a note on why it's here.

Read

📖 Book
Paid Advanced

Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

From Wiley by Brad Feld & Jason Mendelson book (~300 pages)

Why we picked it

The definitive book on how VC deals really work, written by two Foundry Group VCs. It demystifies the term sheet term-by-term so you negotiate from knowledge, not fear.

  • Term sheets divide into economics and control; the dangerous clauses often live in control, not the headline valuation
  • Understand liquidation preferences, option pools, and protective provisions before you sign anything
  • Know the VC's incentives and fund structure so you can predict how they'll behave
Open venturedeals.com →
📄 Article
Free Intermediate

A Guide to SAFEs, Caps, and Discounts (Startup Library)

From Y Combinator Startup Library by Kirsty Nathoo / Y Combinator varies

Why we picked it

YC's fundraising library collects the canonical explainers on how SAFEs convert, how caps and discounts work, and how they dilute you. The most trustworthy free explanation of the instrument almost every seed round uses.

  • A valuation cap sets the max conversion price; a discount gives a percentage off the next round
  • Stacked SAFEs at different caps all convert together and can add up to serious dilution
  • Model the conversion before agreeing terms, not after
Open ycombinator.com →

Use

🛠️ Tool
Free Intermediate

YC Safe Financing Documents (Official Post-Money SAFE)

From Y Combinator by Y Combinator templates + primer

Why we picked it

The primary source for the SAFE itself, plus YC's plain-English primer explaining post-money mechanics. Use the official document, not a random copy, and read the primer before you sign.

  • Post-money SAFE lets you calculate investor ownership precisely and immediately
  • Five standard variants (cap, discount, MFN, etc.) plus an optional pro-rata side letter
  • It's a starting point usable in most situations without modification
Open ycombinator.com →

People also ask

What is a SAFE and how does it actually work? A SAFE (Simple Agreement for Future Equity) lets an investor give you money now in exchange for equity later, when you raise a priced round, withou... Beginner 3 resources → What's the difference between a valuation cap and a discount on a SAFE? A cap sets the maximum valuation at which your SAFE converts, protecting the investor's upside if you raise your next round at a high price; a disc... Intermediate 3 resources → How is my startup's valuation actually decided at the early stage? At seed there's no spreadsheet truth; valuation is set by market comps, your traction, the strength of the team, and mostly by supply and demand fo... Intermediate 3 resources → What do the key terms in a term sheet actually mean? Term sheets split into economics (valuation, option pool, liquidation preference) and control (board seats, protective provisions, voting). The sca... Advanced 3 resources → How do SAFEs and term sheets differ in India versus the US? India can't use the plain US SAFE directly because of company-law constraints, so founders use the iSAFE (structured as compulsorily convertible pr... Advanced 3 resources → What kind of businesses are actually a good fit for venture capital? VC math only works for companies that can plausibly return the whole fund on one bet, which means a huge market, a business that gets more valuable... Intermediate 3 resources →