Dear SaaStr: What Percentage Owership Do Venture Capitalists Want in Start-Ups?
Roughly, it varies by stage, and how big the firm is. The earlier the stage, the more they want to own. And the bigger the firm, the more they want to own:
- Most Big VC Firms ($600-$2b+ in a fund) want to own 15%-20%+ of a start-up, ideally even 30% in a Series A investment. They may be OK with 15%, but below that, they’ll probably pass on most deals.
- Most Smaller VC Funds ($100m or smaller fund) would like to own 10% or more after a Seed or Pre-Seed Investment, but typically model around 7% average ownership.
- If it’s not a core investment, VC funds may be more flexible. But they won’t be as engaged. You just don’t know for sure unless you ask.
Many funds will have exceptions for smaller investments for a variety of reasons, from getting their more junior investors investing experience, to supporting founders they’ve invested in before, to doing seed investments to “learn”, etc. But these exceptions to ownership targets make these investments non-core. Typically, the funds are not as committed / investing in these deals.
Once you get into late-stage deals, it’s more about absolute $$$ invested at a reasonable price than % ownership, but in Seed, A, and B deals, ownership % is important.
The bigger the fund, the more they want and need to own.
More here:
Dear SaaStr: Why Do VCs Want To Own So Much When They Invest?
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Jason Lemkin, Khareem Sudlow
