Beginner's Guide to Cap-Table Dilution: Cloudera's $1B Fundraise
thedavidrees.blogspot.com
thedavidrees.blogspot.com
A 30% option pool would make the founders stake 50% after the hypothetical series A, not 80%.
Not to mention any seed investors, whose stake would also be deducted from the hypothetical founders stake in the series A. And by the time of a Series F', there has usually been additional dilution from expansion of the options pool, warrants issued for venture debt, etc.
If you're wondering, why is the options pool included in the pre-money valuation, when those shares haven't even been issued yet? VCs probably started this practice to make their offer seem more impressive. I'd love to hear any other explanations, it's a curious phenomenon.
EDIT: While its true that option pools have gotten smaller recently, that does mean the pool needs to get expanded again more and sooner, certainly by a series F'.
15% is a good median. Some do go higher but use the option pool to issue portions of the founders' equity, but that's rare.
I'm not an up to the minute expert so maybe this is the new normal, but in my experience, those ratios are usually more like 1:3 or 1:4. It's pretty normal for VC's to own 30-35% of the company after a Series A.
Very hot and high growth companies (Facebook, famously) have been able to sell off single digit percentages of the company with incredibly high valuation increases between rounds. But those results may not be typical.
As for how much is given away... I think Cloudera is a special company. Most of the unicorns are. The same strength ("We can wait on the money") that gets them to a billion is also what allows them to get away with less dilution.
well, one can see how selling only single digits (at sufficient valuations to fund the company's progress) may in turn have potential to make the company very successful - by preserving founder(s)'s control and thus allowing the founder(s) to drive the company further. Basically taking control out of founders' hands VC risk ending up with bigger share of less successful company.
And the VC equity split usually changes by round and market conditions: A is usually 30-35%, B is usually 15-20%, C+ are usually <=10% (this is for a typical startup; Cloudera is a unicorn so the rules are out the window). The general rule of thumb is that founders drop below 50% sometime around the C round. Most VCs are hesitant to dilute founder equity too early because it can hurt recruiting and make it harder to fund later rounds.
The only meaningful dilution is the one where the founders become minority shareholders. Although loss of control isn't necessarily bad and can eventually pay off, unlike valuation it is not abstract, it's tangible.
Yeah, but your ownership stake tells you how much of the value is yours. So it kinda doesn't matter that valuations are hypothetical -- 75% of $any amount is less than 50% of that amount.