EBB

I read only some of these comments and I have to say: EASY !!!

This is static analysis of a single decision; and it has to be viewed with those limitations in mind.

Option analysis and risk, nor is dilution after each round is talked about here. Yes if the Google founders had given shares left an right they would be in serious trouble making isolated decisions. Nonetheless, it is hard if not impossible to bring mathematical rationality to something fairly dynamic, if not irrational.

Very good article thanks -- why am I not surprised? :-) Few minor points. Sometimes, not often, your initial valuation may affect the subsequent rounds (they shouldn't but may). Crowded cap tables are also problematic. Initial employees contributions, however small, will entitle them to more shares that the later ones -- which may cause discontent. Finally think about how many 6.7% you can give up?

I am not even going to get into option analysis; talk about introducing non-linearities. But even in a linear stream Paul's footnote that YC combinator brings to table a lot more than 6.7% (?) is probably correct, but it should also take into account the effects of the multiplier of the later rounds and options on both side.

As someone who worked for investors (and VC wana be's), I really like this quote: \" Though a rejection doesn't necessarily tell you anything about your startup, it does suggest your pitch could be improved. Figure out what's not working and change it. Don't just think "investors are stupid." Often they are, but figure out precisely where you lose them. \"

Regarding novice investors, sophisticated invesotors sometimes bring a lot more to the table than just money. Or at least they are not going to make life difficult later on. The caveate is they are not easy to get to. All the best E