When raising money for a startup or business, one of the most critical considerations is deciding how much equity to give up in exchange for funding while still maintaining control over the company’s direction. Founders often face the delicate balance between attracting necessary investment and preserving decision-making power. Generally, giving away too much equity early on can dilute your ownership stake significantly, leading to a loss of control and potentially even marginalizing your influence on strategic decisions. On the other hand, retaining too much equity might limit the amount of capital you raise, potentially stifling growth. A common approach is to give up between 10% and 20% of equity in seed rounds, allowing for substantial funding while keeping majority ownership. As the company matures and requires additional rounds of financing, founders need to be strategic about structuring deals with investors, perhaps by negotiating protective provisions or different share classes that safeguard voting rights. Ultimately, striking the right balance depends on your growth ambitions, the investor’s value beyond just capital, and your long-term vision for the company’s control and governance.

When it comes to corporate governance, the question of whether it is more important to control the board of directors or to own the majority of shares is a nuanced one that depends largely on the company’s specific circumstances and the goals of its stakeholders. Controlling the board means having a decisive influence over the strategic direction and management decisions of the company, often ensuring that key policies and executive appointments align with certain interests. Even without majority ownership, securing board seats through alliances or dispersed shareholding can achieve this control. On the other hand, owning the majority of shares provides financial power and voting rights, granting the shareholder the ability to influence major decisions, including appointing the board itself. However, majority ownership can sometimes be a passive position if the shareholder chooses not to engage actively in governance. Ultimately, while majority shareholding offers foundational voting power, controlling the board often has a more direct impact on the company’s day-to-day operations and long-term vision, making board control arguably more critical for those seeking to steer a company’s future.