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I've heard founders say this too. The mentality is "look, you'll end up giving away 20% of your company on the round anyways, so you might as well get more $$$ for that 20%". As if the % is fixed and immovable. In my own experience, this minimum % ownership target is a very real issue and bar to jump over for most "proper" Series A VCs. At least the ones leading the round. If I was in that position, and it was a great fund, it would be very hard to imagine saying "no, I'll value my company less, and take less $$$, for the same dilution." Human nature IMO basically favours taking more $$$ every time ONCE % is fixed. However, Aaron might say that the best companies can easily push back on that fixed % approach, which is the true issue here. And that's a good counter point. But many of us, even as YC-backed companies, don't know how to effectively push back against that dynamic. For me, out of the 5 Term Sheets I got for our Series A, I think all of the funds involved had a minimum % ownership target. Hard to negotiate around that. Normally if there is a term you don't like, and you have multiple sheets, you can just play them off each other. But it seemed pretty universal in my admittedly narrow experience. |