Well, of course not.
But let me reframe the question: VCs do prefer founders that are generous with equity in the early days. Especially, before they invest. (later, they don’t like it as much).
It de-risks the VC’s investment, and the VC doesn’t have to pay for the dilution.
Imagine Scenario 1:
3 founders, equity split 50/25/25, no pool
vs Scenario 2:
3 founders + 5 initial employees, equity split 40/20/20/10% for 5 others + 10% for pool
If I can invest in the second scenario, at the same price, and all other things are constant … it’s not only a better financial deal at the margin (because the dilution for the 5 employees plus the 10% pool has already been ‘taken’), but much more importantly, it shows me you are willing to take the dilution to go big.
Many founders aren’t. If you aren’t building a Unicorn, it may not make logical sense to give out a lot of equity. Yes, venture equity is very dilutive. But man, employee equity is also highly dilutive. Between multiple pools, multiple management teams, etc. … you’ll probably end up giving up 30% fully-diluted to your employees over time, maybe more.
So when I see you logically using equity, in a traditional pattern, to incent greatness … I know at some level, the founders believe owning 20%-40% of Something Big is better than 100% of Something Small.
That gives me more comfort investing.