Re:Startup options are better than they look (2017)
by spullara on Saturday October 05, 2019 @02:14PM
(#21167023)
Founder and angel shares absolutely dilute with additional rounds of funding unless you have provisions that are very rare in term sheets and founder agreements.
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Re:Startup options are better than they look (2017)
by coderheed on Saturday October 05, 2019 @04:28PM
(#21167734)
Pro rata [1] is pretty standard [edit: at least in early stage startups], so investors typically have the option to maintain their level of ownership by putting money into the round. Everyone else gets diluted. I think in practice investors only get diluted if they actually want to. I'm not sure how often pro rata is extended to founders, but I would guess it's pretty common.
[1] https://techcrunch.com/2017/09/13/how-pro-rata-works-in-vent...