99 Startups Monthly Newsletter - March 2025
How Much Do Founders Dilute When Raising Rounds?
Being an entrepreneur is complicated in many aspects and there are always some important questions that some never answer, like how to manage dilution as they navigate the fundraising journey. We know that while investment can accelerate growth in a startup, it also reduces ownership over time. A well done strategic approach to fundraising can help founders balance capital needs with maintaining control over their companies. This month we are going to talk about some considerations to take into account when planning for a fundraising strategy.
The Impact of Fundraising on Founder Ownership
Solo Founders vs. Multi-Founder Teams
According to a study made by Carta, of over 45,000 startups, solo founders have become more common over the past years, making up 35% of all startups incorporated in the platform in 2024, compared to just 17% in 2017. However, data shows that solo founders are less likely to raise venture capital—only 17% of startups that secured VC funding in 2024 had a single founder.
Conversely, multi-founder teams tend to have higher fundraising success. Investors often prefer startups with multiple co-founders, as this mitigates risks associated with founder turnover and enhances complementary skillsets.
Equity Splits Among Founders
According to the same study, most founding teams do not split equity equally. Among two-founder startups, only 38.8% split ownership evenly. The trend towards equal splits, however, has grown over the past decade, rising from 31.5% in 2015 to 45.9% in 2024 for two-founder teams. As founding teams become larger, equity splits are typically less balanced.
Founder Dilution Across Funding Rounds
The most significant decline in founder ownership occurs in the early fundraising stages.
Pirced Round: Founding teams collectively own a median of 56.2% of the company’s equity post-raise.
Series A: Founder ownership drops to a median of 36.1%.
Series B: Founder ownership further declines to a median of 23%.
At later stages (Series C and beyond), dilution slows, but founder stakes continue to shrink as more capital is raised.
Industry and Business Model Impact on Dilution
Capital-intensive industries such as biotech and hardware see higher dilution due to significant R&D and operational costs. Conversely, software-driven startups, such as SaaS and fintech, tend to retain higher founder ownership since they require less capital to scale.
Who Owns the Rest of the Equity?
Investors: By Series A, external investors typically own around 50% of the company, increasing to 61.6% at Series B.
Employee Equity Pools: Startups allocate 11.8% of equity to employees at the seed stage, growing to 17.9% by Series D.
Conclusion
Understanding dilution is crucial for founders planning their fundraising strategy. There are many factors to take into account before deciding how much of your company to sell, but entrepreneurs must always be careful and consider the trade-off between raising capital for growth and diluting themselves.
Portfolio Companies
Portfolio companies currently raising investment rounds
Ximple: they are transforming financial access in Latin America by empowering resellers with working capital, digital tools, and new income opportunities. Currently raising their seed round.
Ozon: they offer motorcycle financing to gig workers and couriers of LATAM. Currently raising a $500k USD round.
Kunzapp: they help companies manage their softwares very easy, while helping them save up to 20% in their SaaS subscriptions. Currently raising a +$2M USD investment round.
Bando: The fastest and safest way people in LATAM can invest in, and self custody their crypto. Currently raising a $2M USD investment round.
Supervisor AI: A platform to convert every business conversation generated into growth opportunities and actionable insights. Currently raising a $750k USD investment round.
Please don’t hesitate to contact us in case you are interested in connecting with any of these amazing companies.
Great companies we have recently reviewed:
SamSam: a B2C e-commerce marketplace for LatAm's mass market consumers ($100B+ opportunity).
Manda: Manda provides a no-code platform enabling businesses to rapidly build custom fintech solutions, with wallets, lending, subscription, and more, driving financial inclusion in Latin America.
Recommendations of the month:
Inner Excellence: Train Your Mind for Extraordinary Performance and the Best Possible Life - Jim Murphy: Jim, a performance coach to professional and Olympic athletes in multiple sports, as well as a motivational speaker, tries to gives us exercises, techniques and tools in this book that will improve every area of our life, whether we are an athlete or entrepreneur, single mother or father of five.
Dr. Rana el Kaliouby wants more human-centered ai: Masters of scale.