Starting a business is like setting sail on an uncharted journey. You have a great idea, a dedicated team, and dreams of success. But to get there, you need money. That’s where funding comes in.

However, every funding round comes with a critical decision: how to share ownership. Your capitalisation table, which shows who owns what is like your North Star.

Let’s explore the world of equity distribution in a clear and simple way.

Pre-seed capital: Planting the first seeds

The journey begins with pre-seed funding. At this stage, your startup is more idea than reality, and your team is small. You get funding from Friends, Family, Angels, and Accelerators, usually between US$50,000 and US$500,000. Aim to give up about 10 per cent of your company to outside investors.

Seed round: Growing your idea

As your team grows, your product develops, and you start getting user feedback, it’s time for the seed round. You’ll raise between US$500,000 and US$3 million, and your company’s value will be around US$5 million to US$10 million. The goal here is to give around 15 per cent of your company to outside investors.

Series A round: Building a strong foundation

The Series A round is a big step. Your product and market understanding are getting better. Traditional Venture Capital firms usually lead this round and look to own 15 per cent to 25 per cent of your company. However, make sure you and your team keep at least 50 per cent of your company’s ownership. This ensures you stay in control of your vision.

Also Read: Regional expansion, careful approach to fundraising remain key for SEA fintech startups to grow

Series B: Scaling up

As your user base expands, you need more money to grow. Series B rounds typically raise between US$15 million and US$50 million. Venture Capital firms might take 10-20 per cent of your company. While you focus on growing, remember to balance ownership and investment.

Series C and beyond: Full maturity

At Series C, your startup is mature, and expansion is in full swing. Venture capital firms usually aim for 10 per cent to 15 per cent ownership. It’s crucial to keep dilution in check, so you retain a substantial share of your company.

Conclusion: The art of equity distribution

In the exciting journey of startup fundraising, maintaining a clear vision of equity distribution is key. Your equity strategy is your guide to successful fundraising. A well-organised cap table helps you attract investors while keeping your startup’s financial health in check.

Managing equity wisely not only helps you avoid problems but also keeps you firmly in control as you steer your startup toward success.

In the end, remember that equity is about your stake in your own dream. Keep a steady hand on the wheel, and you’ll navigate the path to successful fundraising for your startup. With your equity distribution roadmap in hand, you’re ready to set sail towards a brighter future. 

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