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Is it normal for a startup CEO to only have 10% equity?

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JASON LEMKIN

Yes. Roughly speaking, this is what generally will happen after 3 rounds of traditional venture capital. If the company sells 15–20% in each round, and 15–20% is reserved for employees, that typically will leave 15–25% for the founders in total.

A few slightly older analyses here: The Pernicious Effect of Dilution in SaaS: The Cold, Hard, Bloody numbers – SaaStr

It’s not the end of the world. This is after 3 full rounds of venture capital, and if you are then on the path to IPO or Big Acquisition (which hopefully you are if you take 3 rounds), that 10% (or whatever amount) will still be worth a lot.

But if you can — skip a round. Or at least, half a round — by stretching a little longer until the next round. Be a little bit more frugal. Maybe even, don’t take that extra round if you don’t need it and can’t put it to good work.

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Published on August 22, 2017
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