Run the Numbers

Carta’s Head of Insights on Dilution, Equity, and the State of the Market Right Now

34 snips
Jun 2, 2025
Peter Walker, Head of Insights at Carta, shares his expertise on venture capital and private tech markets. He tackles the myths around founder ownership post-funding, discussing the ideal equity percentages founders should target. Peter sheds light on employee equity, the complexities of dilution, and the significance of understanding equity compensation. He also explores the evolving landscape of startup funding, including the rise of AI investments and the realities of navigating the startup ecosystem amidst market challenges.
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INSIGHT

Founders' Ownership Drops Fast

  • Founders dilute quickly: after Series A, the median ownership is about 38-39%.
  • The employee option pool accounts for about 12-13%, so founders plus employees typically hold around 50%.
ADVICE

Manage Employee Equity Pool Growth

  • Employee equity pools grow with every fundraise, diluting existing shareholders.
  • Founders should start with smaller initial pools (~8-10%) and expand as needed to avoid excessive dilution.
ADVICE

Negotiate Early Exercise Terms

  • Early exercise of stock options is an underutilized negotiation point during hiring.
  • Extending the exercise window can save employees substantial tax costs and improve financial outcomes.
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