How Much Equity Should You Give in a Capital Raise?

Before diving into the specifics, let’s connect—I’ll be in London from February 4–6th to discuss equity strategies, valuations, and the nuances of raising capital and M&A. Book a time to chat over coffee/tea.

The Equity Balancing Act

According to the 2025 Founder Ownership Report from Carta and our own experiences, founder ownership evolves dramatically as companies raise capital. At the seed stage, the median founding team retains about 56.2% ownership. By Series A, this drops to 36.1%, and by Series B, founders often hold 23% or less.

This dilution can feel like a necessary evil—but understanding the trade-offs and planning strategically can help founders retain more equity while ensuring the business thrives.

Equity Isn’t Just a Number

Equity represents more than ownership; it’s a reflection of your company’s future value. Giving away too much too soon can erode your influence, while retaining too much might scare off potential investors who expect a robust employee pool or significant equity upside for themselves.

Here’s what to consider:

1. Stage of Growth: Early rounds often demand larger equity percentages to attract risk-tolerant investors.

2. Sector Norms: According to Carta’s report, SaaS founders retain more equity on average than biotech founders, which is tied to capital intensity.

3. Founder Size: Solo founders typically own more per capita but face higher dilution risks compared to teams with complementary skill sets.

Tying Back to Timing and Valuation

Timing your raise and understanding your valuation are central to navigating these equity decisions. As highlighted in previous discussions:

• Preparation is Key: Craft your narrative and refine metrics early to secure offers aligned with your goals. (See: Why Timing Is Everything)

• Focus on Valuation Levers: Highlight growth velocity, your competitive moat, and organizational maturity to command better terms. (See: What’s Your Valuation Really Worth in 2025?)

These steps aren’t just about getting a good deal today—they position your business for long-term success.

The Power of Benchmarking

Investors increasingly use platforms like Carta, PitchBook and prior transactions for benchmark analysis. Ensure your equity split, burn rate, and growth metrics align with your sector’s top quartile to stand out. For example, startups offering 20% equity for seed funding typically aim for valuations exceeding $10 million, ensuring dilution doesn’t surpass sector norms.

Navigating the Dilution Trade-off

Deciding how much equity to give often boils down to a few key considerations:

• Cash Needed vs. Valuation: How much capital do you need, and what’s your valuation?

• Dilution Impact: How does the equity you’re offering align with your long-term cap table goals?

• Investor Terms: Convertible notes, capped SAFEs, and structured equity can reduce immediate dilution but introduce complexity later.

Ready to Act?

Raising capital is one of the most consequential decisions for any founder. It’s not just about what you give up but what you gain: the partners, resources, and opportunities that propel your business forward. Here is the source of the Carta study: https://carta.com/data/founder-ownership-full-report/

Let’s discuss your strategy to raise capital without compromising your future. Book a call today to ensure your equity decisions set you up for success.

Tom C. Schapira
Founder and CEO
Imagine Capital Group
E: [email protected]
Website http://www.imaginecapitalgroup.com

Securities Offered through Wellesley Hills Securities. Member FINRA/SIPC