I have an offer to dilute 13% of my company for $100k. It's a good deal?
Hey Guys, I'm raising for my startup and it's a pre seed round. My investor is asking for 13% of my company and in return for $100k investment. I'm wondering if it's a good deal or if not how much should I negotiate?
I'm raising for the 1st time so have a very little idea about the entire process.
It totally depend on what stage your product is. If it's making 5k to 7k or making under 1k per month, depending on these factor dilution percentage can be totally different.
Hey Ellen,
Thanks a lot for your comment, the product was in Beta stage when we started our fund-raising with over 500 users and now we have done a major pivot so we are currently in the idea stage actually raising our pre seed round with 0 users and $0 in revenue but our product is really helpful for small businesses.
So at this stage do you think we should give up that equity?
Then I think 100k is quite good money for 13%
Get the full deal, and go through with it multiple times with and without an expert. What are the terms? What do they bring to the table? What's in the fine print? etc.
I recently wrote about this in my newsletter. https://abov.substack.com/p/dont-be-distracted-by
This is based on another post I saw here.
Hey Jay,
Thanks a lot for the newsletter, it's really good. I think I'll bring more investors and lower the equity of the current investor.
Short answer: very typical deal. For reference, Y Combinator companies get 125K for 7%, but that's taking into account a very selective process.
Happy to chat more if you'd like -- more information (path to revenue, user growth rates, etc) would help assess the situation in more detail.
Hey Alejandro,
Thanks a lot for your thoughts, I know it's a typical deal but do you think it's at a fair valuation?
I saw one of your comments above saying that you have 0 users and 0 revenue. It's more than fair.
The less you have, the more risk they're taking.