Navigating Equity Dilution and Valuation in Startup Fundraising

Timestamps:

5:00 – How much should you raise in a Series A?

12:39 – Should you get existing investors to invest again?

19:12 – How to approach investors for a Series A

30:00 – How to mitigate risk for your investors

35:09 – What if you just bootstrapped?

This episode was originally a live webinar co-hosted with Holycode, a software development partner that's helped more than 140 startups scale by providing customized products and teams for every stage.

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About Laurent Decrue, Kai Eberhardt & Fredrik Isler:

⁠⁠

Laurent Decrue⁠⁠ is the co-founder of the moving company ⁠MOVU⁠ and the software company ⁠⁠Holycode⁠⁠, and the former CEO at ⁠Bexio⁠. Currently he is active as CFO and co-CEO at Holycode. He holds an MBA from the University of Basel and previously worked at DeinDeal.

Kai Eberhardt is the co-founder and CEO at Oviva, an app which provides personalized advice and individual support for targeted dietary changes. He holds a PhD in Physical Chemistry from ETH and previously worked for McKinsey and Groupon.

Fredrik Isler is the CFO of ANYbotics, a Swiss AI company dedicated to creating the future workforce of autonomous robots. He holds an MA in Accounting and Finance from HSG and worked for companies like Sonova Holding, Interbrand and Zetra International AG before joining ANYbotics in 2018.

During their chat with Silvan, Laurent, Kai and Frederik reflected on the dos and don’ts of raising a Series A round. Firstly, they defined their terms: a Series A round is a fundraising round where you give up a “Class A” of shares, which go “on top of” the common shares. At a Series A stage, founders usually raise 5-20M, and accept a 20-33% dilution range. 

Our guests recommended that founders first reflect on how much cash and time their company needs to become profitable, before even raising a pre-seed round. Then, based on this calculation, founders should break the number down into as many rounds as are needed, and carefully plan which milestones will need to be achieved before each round, and set a timeline for these achievements. Frederik recommended that founders space their rounds every 12-24 months.

Coming into a Series A round, it is ideal to both bring along existing investors and also acquire new investors. Being able to bring existing investors into your new round will signal to other potential investors that your company is doing well, since the people who believed in your vision in the previous round still believe it currently. However, not all your existing investors will have the cash for this follow-up round, so you cannot rely on them exclusively. It is also good, in general, to grow your investor pool each time you raise funds. You should make use of your existing investors to get intros to new potential investors. 

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