Ask HN: What are the downstream implications of high dilution during seed round?
In this guide to seed fundraising (https://www.ycombinator.com/library/4A-a-guide-to-seed-fundraising), YC advises not to give out more than 25% of equity to investors at the seed stage. Besides the obvious loss of founder stake, what are the other downstream implications of giving out a higher equity stake?
Let's say I hypothetically give ~40% of my company to the seed stage (or pre-seed) investor for some reason. Would it be a problem for Series A or B investors coming in at ~20% stake down the line? If yes, what are the exact reasons?
Let's say I hypothetically give ~40% of my company to the seed stage (or pre-seed) investor for some reason. Would it be a problem for Series A or B investors coming in at ~20% stake down the line? If yes, what are the exact reasons?