Quick Answer: How Much Equity Do VC Firms Take?

That means if a VC invests in your company at $4 million pre-money ($6 million post) they’ll start with 33% ownership and maybe end at 15-20% ownership if you raise another round or two.

You’re basically selling part of your company.

Once they invest, VCs are hoping you sell your company for at least $100-200 million.

What percentage do venture capitalists take?

Venture capital firms typically insist on owning at least 20 percent of all early-stage portfolio companies.

How much equity do seed investors take?

As much as Dragons’ Den makes for great TV, here in the real world, equity investment doesn’t work like that. The general rule of thumb for angel/seed stage rounds is that founders should sell between 10% and 20% of the equity in the company.

How does a VC firm make money?

How do Venture Capital firms make money? The way Venture Capital funds make money are two fold: via management fees and carries (carried interest). VC funds typically pay an annual management fee to the fund’s management company, as a form of salary and a way to cover organizational and fund expenses.

How long does it take to get VC funding?

Many entrepreneurs have found it can take as long as six to nine months to complete this process. The process can be seen from start to finish on the image below. This makes it very important to be raising enough at each round to carry you through to funding, and to effectively always be in fundraising mode.