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What % of My Company Should Investors Get?
Tuesday, August 30th, 2011 – running time 06:13
Successful entrepreneur and CEO, Jay Adelson, demystifies the start-up process by providing advice, tips, and answering questions. Today he discusses what percentage of your company an investor takes.
Segments
Jay's Chalkboard Notes:
1. Angels with a $10K - $250K investment take 5%-15%
2. Having a prototype prior to funding lowers the amount you give away
3. VC in series A with a $1 million+ investment take 30%
4. When investors are competing, it can be lowered to 20%
5. It should never go over 30%
6. You can reduce % by de-risking the business: hire a team, create a prototype, raise angel $$, get customer letters of intent
Today's Homework Assignment
Your takeaway assignment based on today's question is to talk to others who have raised money (ask for references from investors if you don't know anyone), and ask how much they gave away in the same round. Define/list what you have that brings value: prototype, team members, letter of intent for team or customers, code, a valuable domain name, anything that de-risks the company. Present this list during negotiations.
Have a question about launching a business that you want answered? Submit them to askjay@revision3.com, or upload a video question on our YouTube page. And make sure and follow Jay via Twitter.
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