What is the normal equity distribution for founders after a Series A?

Konstantin Voyku QA Engineer at StarOfService

February 1st, 2017

My question is related to the amount of equity that founders will hold once there has been a Series A financing round completed. Especially taking into consideration that a Seed round was raised prior to the Series A.

Sources like Wikipedia talk about 30%. However, I am not sure what the average distribution should be at this stage.

Would really appreciate your input. Thanks in advance!

Steve Owens

February 1st, 2017

The rule of thumb is 1/3 for each round:

100% @ founders

66% @ Seed

22% @ A

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

February 1st, 2017

There is no average. You will make whatever deal with the Series A funders that you will need to make in order to get their money. If you getting business advice out of Wikipedia you are unlikely to succeed. Hire a good lawyer who is experienced to advise you and to negotiate for you.

Tatyana Deryugina Assistant Professor at University of Illinois at Urbana-Champaign

February 2nd, 2017

I don't know the answer, but I do know statistics, and it's ridiculous to say that "there's no average". Whenever numbers are involved, there is always an average.

Steve Owens

February 2nd, 2017

Of course there is an average. Any set of numbers has an average. The standard deviation may be high, or low.

My assumption is that Face Book and Amazon are outliers, likely 6 sigma out.

I have personally done the startup to exit 3 times. Also invested in several companies. Also advise several companies. This data set is very close to the 1/3 rule of thumb.

Dane Madsen Organizational and Operational Strategy Consultant

February 1st, 2017

Irwin is right - there is no average (Look at the founders of Amazon, Facebook and Google for this comfort. Zuckerberg owns about 28% of Facebook, Bezos still owns 16.5% of Amazon after many rounds and public offerings). There is no rule of thumb. This depends only on the investor and the circumstances. In one of my companies, because of the .Com bubble, at sale the investors owned 85% of the company. In another, at sale, the investors owned 15% of the company. Very different circumstances for both. It really depends on how much you need and the valuation at the investment.