One of the follow up questions from two days ago was: so how much should I expect to own at the end of the day? It all depends on how capital efficient you are. If you need to raise $5M followed by $15M followed by $20M, there is not much pie left at the end of the day. Let's see what that looks like:
Seed/early $5M at a $5M pre-$ leaves you with 50%
Expansion $15M at a $15M pre-$ leaves you with 25%
Later stage $20M at a $40M pre-$ leaves you with about 16%
Back out 8-10% for equity to other managers, warrants, founders, etc and you have 6-8% left over
Unfortunately, too many entrepreneurs don't think this through completely and are extremely resentful or disappointed at the end. Furthermore, if things don't go as planned the money could come in at much lower valuations or you might need to raise more rounds.
In a capital efficient play, you end up with a much greater share. For example:
Seed/early $1M at a $3M pre-$ leaves you with 75%
Expansion $3M at a $12M pre-$ leaves you with 62%
Later $3M at a $27M pre-$ leaves you with ~56%
Back out 8-10% and you have over 45% still in your possession. You'll notice that I even used lower pre-$'s in this second example and it still came out significantly ahead (nearly 7x).
What out for that burn...