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  • 1.  Friends & Family Round Equity

    Posted 11-02-2022 14:09
    Hi! So I am starting to raise my Friends and Family round via Post-Money SAFEs, curious on what the normal % of equity is to offer up to those first investors? I don't want them to feel cheated by any means considering I can't get things moving forward without them. 

    I was thinking of a valuation of $2.5M and a raise of $250,000 for 10% total. It feels okay to me because if I succeed, nothing will feel better than to bring them along with me. But I don't want to scare future investors away if I give away too much equity too early. 

    Thoughts?




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    Darius Bounds
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  • 2.  RE: Friends & Family Round Equity

    Posted 11-03-2022 11:28
    Hi Darius,

    I am also interested in this topic. The feedback I received from fellow advisors on this topic when they went through the process is that they found it easier to have the lead SAFE investor set the terms for all other F&F. This made it attractive for everyone involved in the process. Hope this helps! 

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    Eduardo Silva
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    Original Message


  • 3.  RE: Friends & Family Round Equity

    Posted 11-08-2022 18:36
    This does help, thanks Eduardo! I was thinking of giving a little bit of favor to my first investor and then letting the lead investor set the terms for the rest.

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    Darius Bounds
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    Original Message


  • 4.  RE: Friends & Family Round Equity

    Posted 11-06-2022 04:30
    Hey Darius! In my experience, 10% total at the pre-seed or F&F round is definitely not too much. I typically see between 10-20% of equity in the initial round, but I do agree that staying closer to the lower end of that range will be better for you and will look better for your future investors. Also consider creating an equity incentive pool of about 10-15% as you begin to hire employees - most investors will want to see this. Congrats on your new company!

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    Chris Hoffmann
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    Original Message


  • 5.  RE: Friends & Family Round Equity

    Posted 11-06-2022 14:57
    What I typically see in the early raise is a rolling close based on SAFEs. I would raise as much as you can (if possible) until you reach 10% dilution, then try to build additional traction that will let you close more on slightly higher valuation amounts on the SAFE notes. 

    I would target 20-25% dilution for the first $1.5m-$2m dollars you raise, that should set you up well for downstream financings. 

    Regarding setting the terms of the round, if you have a lead investor, that's great, but if you want to start taking capital in now which you might need to generate momentum, and you don't currently have a lead investor, then you may need to price the deal yourself. SAFE notes almost always have the same terms, that's the beauty of them. 

    For this time of year, it's unlikely you'll find a lead that is a professional VC before the end of the year that is going to go through diligence and set terms on a raise. I'd just pick some terms bring some cash in and get ready for a heavy fundraising push behind some new traction in the new year. 

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    Original Message


  • 6.  RE: Friends & Family Round Equity

    Posted 11-08-2022 18:46
    Thanks for the details Brian, I'll keep that in mind as well. It's always good to hear target dilution amounts. I always search online for it and people don't seem to talk about it openly for some reason. And I figured it would be next year before I could really start getting traction with VC's. I'm slated to have the app finished early Q1, so by then I'll be ready to get the ball rolling.

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    Darius Bounds
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    Original Message


  • 7.  RE: Friends & Family Round Equity

    Posted 11-08-2022 18:38
    Thanks Chris! Good to know! I haven't even gotten as far as creating an incentive pool yet but as I was setting up with Clerky, they recommended the same thing. And thanks!!! It's been a hell of a ride so far. Learning something new everyday, lol.

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    Darius Bounds
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    Original Message


  • 8.  RE: Friends & Family Round Equity

    Posted 11-08-2022 18:39
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    Darius Bounds
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    Original Message


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