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How much Equity should Founders reserve for themselves?


👉🏼 Jeff Bezos holds ~11% of Amazon
👉🏼 Mark Zuckerberg has ~13% of Meta
👉🏼 Vijay Shekhar Sharma holds ~14.5% of Paytm
👉🏼 Ritesh Agarwal holds ~7% of Oyo
👉🏼 Deepinder Goyal holds ~5.5% of Zomato
👉🏼 Falguni Nayar holds ~52% of Nykaa
👉🏼 The 5 Founders of Delhivery collectively own ~6-7%


Now while all of the above shows a wide range of holdings from 5% to 50% of the company at a late stage close to IPO, this has the following learnings for Founders while thinking of dilution.


👉🏼 Imagine you’ll reach IPO in 10 years, and each time you raise money, you make it last 24 months of runway


👉🏼 You need to reserve minimum 15% for ESOPs, Advisors, Founding Team and CXOs


👉🏼 You’ll give away an average of say 17.5% in each fundraising round that means roughly 70% of your company given away in 4 rounds


👉🏼 What is left is 15% that should be your minimum target ownership at IPO


👉🏼 More the number of Founders, this target ownership gets split among them all


Know that this is just a thinking framework and does not always hold true, but it gives you an indication of how to plan dilution in future rounds of funding.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.


Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.