Investment And Equity Management

Only 1 in 5 founding teams at VC-backed startups own 50%+ of their companies after a Series A round. AKA raising venture is pretty damn dilutive. Not sure where the idea that founders should expect to still be majority owners in the business after Series A came from (though I do hear it repeated frequently). But the data is clear that's the minority case. Of course this does NOT mean that investors take control after the A because the employee option pool sits in between the founder and investor stakes. Add up founders plus the option pool and the median is neatly at 50%. Data below is from 3,500+ startups that have raised venture rounds in the past 18 months or so. All US companies, no deep tech included. 𝗠𝗲𝗱𝗶𝗮𝗻 𝗙𝗼𝘂𝗻𝗱𝗶𝗻𝗴 𝗧𝗲𝗮𝗺 𝗢𝘄𝗻𝗲𝗿𝘀𝗵𝗶𝗽 (𝗱𝗮𝘆 𝗮𝗳𝘁𝗲𝗿 𝗿𝗼𝘂𝗻𝗱 𝗰𝗹𝗼𝘀𝗲𝘀) • Seed: 55.1% • Series A: 36.6% • Series B: 23.5% • Series C: 17.5% • Series D: 10.9% The dilution between rounds has been fairly consistent over the past few years (20% seed, 20% sold at A, 15% at B, etc). But the rapid rise in SAFE rounds means the initial priced financing is a heavier dilution point that many founders anticipate. The big question: does AI change this? If it becomes viable to build venture-scale companies with only a round or two of venture money, founders come out as winners. Throw in fewer employees and maybe the returns are even more attractive (although I'd love to see increased ownership on a per-employee basis if the teams are going to be tiny). As always - go in prepared. VC can be great, not-VC is great, only mistake is not understanding the game you're about to play. Share with a fundraising founder 🙏 #startups #founders #founderownership #VC Lots more data on founder equity in the Founder Ownership 2025 report: https://lnkd.in/gGWpFpEm

📢 For the past 18 months I have been serving on a Government Taskforce - looking at how we can supercharge Women-led *High Growth* Businesses (inc. a few trips to Number 10 Downing Street)... 📈 This builds on much of the great work already started by The Rose Review & Rose Review Board which looks at *all* women led businesses, and the valuable data collection led by the British Business Bank, British Private Equity & Venture Capital Association (BVCA), Diversity VC Level 20 and The Treasury with the Investing in Women Code. This Taskforce was specific to *High Growth* Women-Led Businesses - and was led by one - the indomitable Anne Boden. Anne founded Starling Bank in 2014 and has since scaled it to 3.6m customers, £353m in revenue last year and £195m in profit.* She truly embodies the potential of High-Growth Women-Led Businesses and we need 10,000x more Starlings in order to power our economy forward. Being on this Taskforce was not without its challenges as the topics we're tackling are so vast and complex. I wish we had the time and resources to do much more. However - today we launch our (92 page!) final report, including recommendations on how to break down barriers and support the economy. The key recommendations are: Recommendation 1: Investors should better monitor the proportion of funding they invest in female founded businesses. Recommendation 2: Firms should set their own voluntary targets for the number of women in senior investment professional roles and report against them on their websites. Recommendation 3: Increase signatories to the Investing in Women Code, particularly for private debt funds and Limited Partners, to boost investment in women-led enterprises. Recommendation 4: Drive inclusive behaviour in the investment ecosystem. The FCA should reduce the threshold for companies below 251+ employees to incorporate venture capital firms to drive greater diversity in the companies and, thus, their decision making. Recommendation 5: Roll out Female Founder Growth Boards across England. Recommendation 6: Inspire girls and women to become high-growth entrepreneurs. Recommendation 7: Improve data collection on the number of female founders. Thanks to my fellow Taskforcers ●     The Chair, Anne Boden MBE, founder of Starling Bank ●     June Angelides MBE: Investment Manager, Samos, and CEO and Founder, Mums in Tech ●     Judith Hartley: former CEO of British Patient Capital and British Business Investments, British Business Bank ●     Zandra Moore: CEO and Co-founder, Panintelligence ●     Deepali Nangia, Partner, Speedinvest and Co-founder Alma Angels ●     Jan Putnis: Partner, Slaughter and May ●     Angela Scott: Founder, TC BioPharm Ltd ●     Helen Steers: Partner, Pantheon ●     Sam Smith: Founder and former CEO at finnCap Cavendish Group Plc I couldn't have been part of this Taskforce without support from Matt Penneycard the team at Ada Ventures. 🙏 *Figures at at March 23. Link below.

Good news! Gulf’s first woman-led private equity firm raises a $200 million debut fund. In a region where private equity has long been a male-dominated game, this is nothing short of historic. Huda Al-Lawati, founder and CEO of Aliph Capital, just closed a $200 million debut fund, making it the first woman-led private equity firm in the Gulf to raise this kind of capital. The final close was 20% below the original $250M target. But in today’s volatile fundraising climate, closing a first-time fund is a massive win. So, what makes this even more powerful? 1/ Institutional Backing Big names like ADQ, Jada Fund of Funds (Saudi PIF), and SVC-backed Aliph. That’s trust in a new kind of leadership. 2/ Focused, Purpose-Driven Investing The fund, Aliph Capital, will invest $15M–$40M per company in mid-sized Gulf businesses, with a clear focus on: > Infrastructure & industrials > Healthcare > Education > Consumer industries These are sectors with massive growth potential but often need capital, modernization, and digital transformation. Already in the portfolio: —>  The Petshop Acquired in 2022, now 12+ locations, new vet services, and a complete digital overhaul. A great bet, given rising pet ownership in the region. —> SANIPEX GROUP A 25% stake in this premium bathroom and outdoor products supplier, helping with acquisitions and succession as the Gulf’s luxury real estate market continues to boom. ✅ It signals that the MENA financial ecosystem is evolving, not just in how capital is deployed but also in who deploys it. And most importantly, it opens the door for many more women to build and lead in high-stakes investment environments. It’s a moment of change for regional finance, gender equity in leadership, and the next generation of Gulf-grown businesses. What do you think this means for the future of women in finance in the Gulf and globally? #Gulf #Womenfounder #VC #startup 

Founders start with 100% equity in their company. A seed round takes 20%. A Series A takes another 20%. Series B takes 15%. Each round also replenishes the ESOP pool, which is carved out of the founders' shares. Add an anti-dilution adjustment (a clause that protects investors from losing value when the company raises a future round at a lower valuation), and the two co-founders often end up owning 15–18% of the company at some point in time. That's not it. The crazy part is the liquidation preference (a clause that gives investors the right to get their money back first when the company is sold or liquidated before founders and employees see any proceeds). Most Indian VC term sheets today use a 1x standard. Meaning investors get all their money back first. For example, if a company raises ₹200 crore across its life and exits for the same amount, investors walk away with everything. Terrible outcome, btw, for everyone. VC was looking for a larger outcome, but the entrepreneur sees no outcome after years of effort. This is something we should all think of. And investors themselves, when they propose solutions to these tricky situations, also have a moat and can stand apart from the rest. Like I keep saying, capital being commoditised today, everything else around that capital is what will really get the best founders keen to partner. One option is to give founders equity as a gift linked to business performance. But investors must constantly think of these options. Even founders should be careful throughout with liquidation preference (always try to keep it at 1x). Also consider secondary sales to help them access some liquidity. To ease the financial pressure and ensure some outcome through the journey of building the company. We should view the Indian VC market as a space where both founders and investors win, where employees with ESOPs in lieu of salary actually make money, and where exit headline numbers translate into real outcomes across the cap table. Unfortunately, that can't happen automatically. It happens when investors and founders deliberately keep the ownership and incentive structures aligned throughout the company's life.

🚨 Scotland’s VC market just posted a 19% rise in funding… and a 57% drop in deals for women-led businesses. Progress for some. Exclusion for others. Record-breaking investment in 2024 - £704 million in total. But behind the headlines lies a serious imbalance. 💰 Yes, investment rose 19% year-on-year, defying UK-wide trends. ❗️But that growth was heavily concentrated in a few late-stage mega deals, 17 deals over £10m made up more than half the total pot (£372.7m). 🧊 Meanwhile, early-stage funding, where most women-led startups sit, collapsed, dropping 17% to £331m. ⚖️ Worse still, only 3% of the total funding (£22m) reached women-led startups. 🔁 This creates a vicious cycle: lack of visibility ➝ fewer deals ➝ smaller pipeline ➝ even less investment. It’s growth that celebrates the few, while starving the many. This isn’t just inequality. It’s a missed opportunity, and a £250 billion one at that. At egg, we’re working to close that gap: We’re supporting women founders with mentoring, visibility, and access to networks. We’re building the kind of confidence and community that drives long-term, scalable businesses. And we’re doing it without waiting for permission. 💡 The future of Scotland’s innovation economy depends on whether we choose inclusion over inertia. 📣 Investors: the pipeline isn’t empty, it’s ignored. It’s time to back women-led. Stats taken from a Substack article entitled "The Scottish Paradox - A £704m boom on a Foundation of Sand" - and shared in comments. Article written by John Glover Image Anna Moffat

What happens when African fund managers lead the investment strategy? In a recent CNBC Africa interview, DOROTHY NYAMBI, CEO of MEDA (Mennonite Economic Development Associates) shared powerful insights into how the Mastercard Foundation Africa Growth Fund is reimagining what it means to put African capital in African hands. The Fund demonstrates that capital can be reimagined and redirected to serve African fund managers, entrepreneurs, and especially women, using a gender-lens and locally led investment model that: 1. Rethinks gender-lens investing • It’s not about ticking diversity boxes- it’s about empowering women with real agency to influence investment decisions and strategy. • The Fund emphasizes patience and local context, shaping investment approaches to suit real-world African realities rather than imposing external templates. 2. Builds local ecosystems • Local leadership matters. The Fund invests in and supports African and female-led managers, ensuring they are not just invited to the table- but leading it. • It enables fund managers to spearhead strategy and draw in other stakeholders, strengthening the investment ecosystem from within. 3. Focuses on returns “on inclusion” • The Fund measures more than financial returns. It prioritizes social impact, like job creation and economic empowerment. • The goal: dignified, sustainable employment, particularly for African youth, moving beyond short-term fixes. 4. Is intentional about youth and women inclusion • The Fund challenges outdated narratives that investing in women is riskier, instead proving the financial viability of women-led enterprises. • It applies a holistic, end-to-end gender lens, supporting women as entrepreneurs, fund managers, and drivers of growth across the value chain. Impact so far: • ~US$150 million deployed across 18 African-led investment vehicles • 49 SMEs supported in 12 countries • 2,500 full-time jobs created, with 1,100 held by women • 75% of supported vehicles are female-led • Honored with the DEI Award at AVCA’s 20th Anniversary Conference In essence, African-led, gender-smart capital flows are delivering equity and economic resilience. Fund managers and entrepreneurs are shaping outcomes with a clear focus on inclusion, impact, and sustainability. This is a transformative model where African and female-led fund managers are no longer just recipients of capital, but drivers of it, reshaping the investment landscape to deliver both financial returns and lasting, meaningful change across the continent. Watch the full interview: https://lnkd.in/d9SuiuSj #Africa #GenderLensInvesting #InclusiveCapital #ImpactInvesting #Leadership #YouthEmployment

Most equity programs I see in startups are a mess that loses talent. Here's the 5 things they get wrong and how to fix it. I've spent enough time inside startup equity programs to know how most of them actually work. Who gets equity? Depends on the hire. How much? Whatever it took to close the offer. Vesting terms? Whatever the template said when the company was 20 people. Pave just published data from 4 million grants across 4,500 companies. Here's where most startups are off. 1. One cliff policy for everything. 80% of companies cliff new hire grants. Makes sense, you want time to assess fit. But cliffs on ongoing grants to tenured employees have dropped from 34.6% in 2020 to 17.6% today. If you're still applying the same cliff to a refresh grant as a new hire offer, that's a default nobody questioned. 1. Ad hoc participation. 55% of entry-level new hires receive equity, rising to 94% at Director. R&D hires get grants at nearly twice the rate of G&A (84% vs 49%). These should be conscious decisions, not whatever came up during the offer. Build a one-page participation grid by level and function. 1. Equity only flows through promotion. 95% of promoted employees get a refresh grant. High performers who stayed in their role? 44%. If the only way to earn more equity is to move up, you've got a blind spot with your best ICs who are happy where they are. 1. Equity burn rate is invisible. Median burn rate is 2.95%. Growing companies sit around 2.9%, stable headcount at 2.6%. AI companies run at 3.9%, nearly 40% above the broader tech median. Your burn rate should reflect a deliberate choice about what talent you're competing for. If nobody can explain what yours is, that's a problem. 1. No plan for the options-to-RSU transition. 97% of companies under 100 employees use options. But RSUs become dominant around 500-1,000 employees. Start the board conversation before a senior hire from a later-stage company forces it on you. Access the full report here (free):  https://lnkd.in/ge2ej8WW

Investing in early-stage #startups is risky. Thus, choosing the right financial instrument is important. Many #VCs don't invest directly as equity in startups, they use convertibles like warrants, options and convertibles to protect their risk. Let me substantiate. We'll use a hypothetical investment fund, "VC1," considering an investment in a startup, "Techstart." Hypothetical Scenario: Techstart #Valuation (Pre-Investment): $20 million. VC1 Fund Investment Amount: $2 million. Investment Options: [1] Investment with Warrants: - Warrants Issued: Right to purchase 10% of Techstart at the current valuation. - Strike Price for Warrants: 10% of $20 million = $2 million. [2] Investment with Convertible Note: - Convertible Note Terms: Convertible into 15% of Techstart if the company hits a $40 million valuation within the next three years. - Investment Amount: $2 million. [3] Investment with Options: - Options Issued: Right to purchase 5% of Techstart at the current valuation. - Strike Price for Options: 5% of $20 million = $1 million. - Options Cost: $200,000. Post-Investment Scenarios: [1]Scenario A: Techstart's valuation increases to $40 million within three years. [2] Scenario B: Techstart's valuation remains at $20 million. Mathematical Model: [1] Scenario A: Valuation Increases to $40 Million a)Warrants: Value of 10% after Increase: 10% of $40 million = $4 million. Profit: $4 million - $2 million = $2 million. b) Convertible Note: Convertible into 15% of Techstart: 15% of $40 million = $6 million. Profit: $6 million - $2 million = $4 million. c) Options: Value of 5% after Increase: 5% of $40 million = $2 million. Profit: $2 million - $1 million (strike price) - $200,000 (cost) = $800,000. [2] Scenario B: Valuation Remains at $20 Million a)Warrants: Potential Profit: Negligible, as the valuation hasn't increased. b)Convertible Note: Not Converted: Remains as debt. Return: Based on interest rate (assume 5% per annum) = $2 million * 5% = $100,000 per annum. c) Options: Potential Profit: Negligible or none, as the valuation hasn't increased and the cost of options is a sunk cost. Insights: [1] Scenario A (Increased Valuation): - Convertible Note: Offers the highest profit, assuming a significant increase in valuation. - Warrants: Provide substantial profit but less than convertible notes. - Options: Offer the lowest profit among the three, although still positive. [2] Scenario B (Stable Valuation): - #ConvertibleNote: Acts as a debt instrument, providing interest income. - #Warrants and #Options: Do not offer significant value if the company’s valuation does not increase. Conclusion: In a high-growth scenario (Scenario A), convertible notes offer the highest potential return, assuming the valuation target is met. In a stable or low-growth scenario (Scenario B), convertible notes offer fixed income through interest, whereas warrants and options may not provide significant value.

In 2024, the landscape of #venturecapital investment for #femalefounders has shown both progress and persistent challenges. Here's an overview: 📌 #Funding trends: Female-founded startups have continued to receive a disproportionately small share of venture capital. In the U.S., startups founded exclusively by women garnered only about 2.2% of the capital invested in venture-backed startups in the first half of the year. Meanwhile, #startups with at least one female co-founder slightly improved their share, representing 14.8% of total capital invested. This stark disparity highlights a #fundinggap that has not significantly narrowed over the years. 📌 Sector-specific insights: The femtech sector, which focuses on female health technology, has seen particular struggles. Female-founded #FemTech companies have historically raised less than their male counterparts, with 2024 continuing this trend. However, there's a silver lining with an increase in female investors and venture capitalists, which could influence more equitable funding in this sector. 📌 Investment success stories: Despite the broader funding challenges, some female-founded companies have managed significant rounds. For instance, companies led by female CEOs have raised substantial funding, showcasing that with the right combination of innovation, market fit, and investor interest, female-led ventures can secure significant investments. 📌 Challenges and biases: Female founders often face biases in the investment process. Reports indicate that 84% of female founders feel they encounter gender bias during evaluations, and they are asked significantly more questions about their ability to scale compared to male founders. Moreover, the average cheque size for female-led startups remains notably lower than for male-led ones. 📌 The bright side: There's an increasing awareness and action to address these disparities. Initiatives like the Investing in Women Code in the UK are making strides, with signatories accounting for a significant portion of VC deals in 2023, suggesting potential for positive change. Additionally, there’s a growing narrative that investing in female entrepreneurs can boost global GDP significantly, encouraging more investors to consider diversity in their portfolios. 📌 Conclusion: While 2024 has not seen a dramatic shift in venture capital distribution to female founders, there are signs of incremental improvement and a stronger push towards parity. However, the journey towards equal #investment opportunities for female founders is ongoing and requires sustained effort from both the entrepreneurial and investment communities. Some resources 👇🏽 https://lnkd.in/dX9y58Cd https://lnkd.in/dz2hq44h https://lnkd.in/dNkujwhB

95% of first-time founders I’ve spoken to regret giving their co-founder too much equity… or sometimes too little. The biggest mistake they make? Treating equity like a one-time negotiation instead of what it really is - a long-term incentive system that determines who stays committed when things get tough. A great startup takes years to build. Your equity split should ensure that your co-founders stay committed through the highs and the inevitable lows. What founders get wrong: -They assume co-founders fully understand the long-term grind -They hesitate to be generous but also fail to use vesting as a safeguard -They focus on “fairness” today instead of what drives future commitment Here’s how you should be thinking about equity: 1. Ask yourself: Do you even need co-founders? If you’re hesitant about giving equity, take a step back. If they’re not worth a meaningful stake, should they even be co-founders at all? Sometimes, hiring a strong early employee is a better choice. 2. Use equity to drive commitment A well-structured equity split ensures your co-founders stay motivated for the long haul. You don’t want to be in a position where you have to push them every day - their ownership stake should do that for you. 3. Be generous, but protect the company A 4-year vesting schedule with a 1-year cliff is a good baseline. If someone leaves within a year, they get nothing. After that, they earn ownership gradually over four years. 4. Factor in long-term contribution, not just initial effort The person who had the idea isn’t always the one who builds the business. Your equity split should reflect who will create the most value over time, not just who was there on Day 1. 5. Don’t let ‘fairness’ today destroy the company tomorrow Equal splits might seem like the easiest option, but they don’t always align with long-term contribution. The right split should maximize motivation and retention, not just keep everyone happy in the short term. - At the end of the day, a startup isn’t just built on ideas - it’s built on commitment. Get the equity split right, and you set the foundation for a company that lasts. What’s your take? Have you faced any problems with ownership? #entrepreneurship #startups #equity