Question
I'm trying to figure out the value of my company for our seed round. I'm currently building the product with a very large company that wants to be a customer and probable investor.
We are a SasS company in the senior care market sector. There are two similar companies which had seed rounds in the past year, Filament Labs and Medocity.
Filament Labs
https://www.crunchbase.com/organization/filament-labs
Medocity
https://www.crunchbase.com/organization/medocity
Answer
If you are a business that is not in need of massive amounts of capital to stay relevant (think, hyperlocal delivery, food start-ups etc.) then my advice is to ensure Founders dilute no more than 30% for Investors during a Series A round. Given that in almost all cases you would be required to set aside a bare minimum 10% towards a ESOP pool before the Investor comes in, as a founding team you are left with slightly more than 60% of the company.
There are some caveats though, firstly, do your due-diligence on the Investors you are taking the funds from, make sure you talk to their portfolio companies and even senior level employees within these firms. Ensure the referral loop includes the so-called duds in their portfolio. The red flag would be if you get to hear stories of co-founders being arm-twisted out of their equity or, even their jobs. In which case think hard about how desperate you are for the funds on offer. Equally important, the fact that very few entrepreneurs tend to realise is how the rest of the terms affect their equity in future as they close their investment rounds. To get a better handle on how things continue to change as you continue to raise from seed to series A and beyond this is a great primer: https://www.startups.com/library/expert-advice/series-funding-a-b-c-d-e
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
