Be right on the money
Rick LeFaivre
No standard formula determines how much equity a startup must give up in order to receive venture capital, although Series A funding typically purchases about a 50% stake. Considerations include market and investment size, time frame before revenues and profits start flowing, the entrepreneur's reputation and the VC's gut feeling.
Many founders ask for less money in hopes of maximizing the value of their own equity stake. That's usually a mistake, says Rick LeFaivre, a partner at OVP Venture Partners in Seattle. "Would you rather keep 80% of a company worth zero or 50% of a company worth $500 million?"
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