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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

I don’t feel that as a VC sneaking in nefarious terms into a term sheet that the entrepreneur doesn’t understand is a good way to build a long-term relationship nor to build a long-term reputation but this does happen and more frequently than we all would like. Industry standard post your first round of funding will be 15-20%.

Valuation 405
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The Silliness Of Recapping Seed Rounds

Feld Thoughts

Assuming equity is raised at or above that cap, the total dilution, before the new money, is 16.6% (equivalent to an equity financing of $1m at a $6m post money valuation. The company spends the $1m building and launching their first product. The product gets a lot better. So they recapitalize the company.