Ask HN: How much equity to give away for $100k?
Hi HN, we are wondering how much usually other startups are giving away for 100k funding? Say, you are not launched yet and about 70% from releasing version 1.0. There are 3 founders. Thanks
What is the probability of failure?
The following is really, really rough, so feel free to argue with it, but here's some thinking.
Suppose a VC expects, on average, to double their money over three years. Suppose you have a 10% chance of $2M profit over three years, a 60% chance of $100K profit over three years, a 20% chance of breaking even over three years, and a 10% chance of losing everything.
Your expected profit over three years is around $200K to $250K. That's twice what they invested, so they want 100% equity.
Now tell me where that's wrong.
Shares = investment amount/current valuation
There is no universal answer. If your version 1.0 is likely to earn us $1B in sales the first year you would give away a hell of a lot less than if your version 1.0 is a freemium app targeted towards furries to help find local dry cleaners. It all depends.
you can't really answer such question if you don't say what it is you are doing.