Question
Can somebody give me guidance so that my economic interests as founder are protected? I don't mind losing some control.
First round (Seed) - 100K USD @ 25%
The company spent all the money but could not raise further funding. Seed investor came back with new terms, renegotiated first round for:
100K @ 55% and bringing the second round with following terms.
Second round (Raised through Seed investor's friends and family)
400K USD at 12.5% dilution
Answer
Founders have their economic interest and control through the number of shares they have in the company. The more equity you have, better control and more profits as well as financial value you will have.
Therefore the best way is to protect your equity and negotiate in an effective and efficient way to retain a larger part of it. Investors will look for more equity and founders will look for more money. This is where negotiation comes into picture.
I am a startup lawyer and fundraising consulting. I have been running my own startups since long. I can help you and answer all your questions.
I encourage you to please setup a call and let's discuss further.
Regards
Shishir
