- Equity given = amount raised ÷ post-money valuation.
- Many seed rounds sell somewhere around 10 to 25% of the company, but every round is different.
- Dilution compounds: each new round shrinks everyone's share, including earlier investors.
- Raise enough to reach the next milestone with some buffer, not as much as you can get.
The simple formula
If you raise ₹2 crore at a post-money valuation of ₹10 crore, investors own 20% of the company after the round. Post-money means the valuation including the new money. Pre-money is the valuation before it, here ₹8 crore.
What is common at seed
There is no fixed rule, but many seed rounds sell somewhere around 10 to 25% of the company. Selling much more than that early can leave founders with too little ownership after a few more rounds, which some later investors see as a risk.
How dilution adds up
Each round dilutes everyone. If founders own 100% and sell 20% at seed, they own 80%. If they sell another 20% at Series A, they own 64%, before any option pool. Plan two or three rounds ahead so you know where you are likely to end up.
The option pool
An employee stock option pool (ESOP) sets aside shares for future hires. Investors often ask for it to be created or topped up before their round, which means it comes out of the founders' share. Ask how big the pool is and whether it is counted before or after the new money.
How much to raise
- Pick the milestone that makes the next round easy, like a revenue level or a product launch.
- Work out the monthly cost of getting there.
- Add a buffer, often several months, because things take longer than planned.
- That total is your raise. Put it, and what it buys, on your ask slide.
Valuation, dilution and term sheets have legal and tax consequences. Have a lawyer and an accountant who work with startups review the numbers before you agree to anything.