Founders Are Giving Away More Equity Than They Should. Here’s How to Protect Yours

The steepest dilution is not at Series A. It’s the stage before it.

BY HILLARY REMY, FREELANCE WRITER

Ask most founders when dilution gets painful and they will say Series A. That’s when institutional money arrives, term sheets get negotiated, and lawyers start earning their fees. It is also, for many of them, the moment they realize the painful part already happened.

The instruments that did the damage were signed months or years earlier, in short documents that required no valuation negotiation and took less than an afternoon to close. Pre-seed SAFEs, stacked one after another as the company grew, convert all at once when the first priced round closes. By then the founder is looking at a cap table that shows far less ownership than they expected. There is nothing left to........

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