Fundraising is not just about your vision. It is also about the math on the other side of the table 📊
Every VC has a magic number. A sweet spot for ownership and check size that makes their fund math work. If your round does not fit into that model, they might pass. Not because you are a bad company, but because the numbers do not add up.
Here is the general shape of it:
▪️ 𝗦𝗲𝗲𝗱 funds usually want 10 to 30 percent ownership. They take the most risk and need the upside to return the fund with a few wins
▪️ 𝗦𝗲𝗿𝗶𝗲𝘀 𝗔 funds target around 15 to 25 percent ownership. Bigger checks, but still looking for 10x potential
▪️ 𝗚𝗿𝗼𝘄𝘁𝗵 𝗳𝘂𝗻𝗱𝘀 from Series B onwards may accept smaller ownership and lower upside, but only if the market is massive and the company has momentum
This is why you sometimes hear “we love what you are building, but it is not a fit.” Many times, it is the fund math speaking.
The best founders understand this and shape their raise not only around vision and traction, but also around how it helps the investor hit their own numbers.
I recently had the chance to sit down in San Francisco with Anna Piñol, Partner at NFX, together with Guillermo Flor on the Compound Podcast.
We talked about how NfX thinks about fund math, ownership, and what they really look for in founders.
🎧 Full interview here: https://lnkd.in/dXAReMdG
👉 Have you ever had a VC pass on you simply because the ownership did not work for their model?
Every VC has a magic number. A sweet spot for ownership and check size that makes their fund math work. If your round does not fit into that model, they might pass. Not because you are a bad company, but because the numbers do not add up.
Here is the general shape of it:
▪️ 𝗦𝗲𝗲𝗱 funds usually want 10 to 30 percent ownership. They take the most risk and need the upside to return the fund with a few wins
▪️ 𝗦𝗲𝗿𝗶𝗲𝘀 𝗔 funds target around 15 to 25 percent ownership. Bigger checks, but still looking for 10x potential
▪️ 𝗚𝗿𝗼𝘄𝘁𝗵 𝗳𝘂𝗻𝗱𝘀 from Series B onwards may accept smaller ownership and lower upside, but only if the market is massive and the company has momentum
This is why you sometimes hear “we love what you are building, but it is not a fit.” Many times, it is the fund math speaking.
The best founders understand this and shape their raise not only around vision and traction, but also around how it helps the investor hit their own numbers.
I recently had the chance to sit down in San Francisco with Anna Piñol, Partner at NFX, together with Guillermo Flor on the Compound Podcast.
We talked about how NfX thinks about fund math, ownership, and what they really look for in founders.
🎧 Full interview here: https://lnkd.in/dXAReMdG
👉 Have you ever had a VC pass on you simply because the ownership did not work for their model?