Graduation Rate Assumptions: Individual company dilution needs to be factored into fund performance. One way to do this is to make some assumptions around the percentage of total companies raising subsequent financing rounds, as well as assumptions on the size and pre-money valuations of those rounds. Some funds may assume that of all the seed inv

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Essentially, founders see themselves getting diluted during each subsequent financing. Although dilution is a typical part of each subsequent round of financing, they sometimes want to be awarded options for their role as employees. If they do, the founders should be prepared to raise the bar and tie additional options awards to improved performanc

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This higher risk level in health/pharma companies shows up in the way VCs structure their investments. In an early-stage round of financing for a software company, all the investors may dilute the founders by around 15 to 30 percent of the company’s stock. For a typical early-stage pharma or biotech company, investors may dilute the founders at a h

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