YC founders: Don't rely on Demo Day for funding. Focus on profitability instead.

"Giving up nearly 50% of your company by the end of your seed round is actually insane" Well, first off it's selling*, not giving up. And second - no, not actually that crazy! Let's do some actual math. These days, the following path is pretty common: • Pre-seed on SAFEs: raise maybe $1.5 million and sell 10% of the company (actual dilution to be taken on in the first priced round of course).    • Seed (on SAFEs or priced): raise another $3M-$4M, sell 20% of the company.    • Option pool for employees: 10-12% of company equity. Add it all up, and by the time the seed round is closed the founders own 58% or so. Now, is this "good" or "bad"? Neither. It's the market. Back in the day (circa 2015-2018), raising $5M would be Series A money at least. Now venture is more professionalized, so the round sizes get bigger at earlier stages and so does the dilution. These out-of-date assumptions contribute to founders feeling frustrated at the dilutive nature of VC. Most people also lump in the option pool with the founder ownership for some reason, making the true numbers look worse by comparison. The other tagline you often hear is "founders should exit their Series A rounds with 50%+ of the company". Just know that only about 1 in 4 founding teams actually pull that off. So yeah - dilution is high! What can you do about it? 1. Don't raise VC (or raise less VC).     2. Negotiate better terms for your dilution (either by trading off in other key deal clauses or by being in such high demand from investors you get to dictate terms).     3. Get Zen about it 🙏 Note the data above is for software startups - deep tech businesses often face even steeper dilution in the early stages. The more you know! #startups #founders  

Love this Peter Walker, so misunderstood in the broader founder community. Been asked about alignment between operators and long-term investors recently so thought I would share. Unlike the VC world where founders start at 100% and dilute down, in PE/buyouts, management typically receives 10-20% of equity post-transaction. The Standard PE Equity Structure: - PE Sponsor: 70-80% ownership - Management Team: 10-15% (with 4-5 year vest) - Co-investors/Others: 5-10% I once saw a 40-page agreement kill a handshake deal. The business went on to 10x with a simpler investor. Complexity is a hiding place for misalignment. The Common Traps That Destroy Alignment: More protections often mean less alignment. Complex structures create competing micro-incentives rather than focus on the few shared goals that drive returns. Complexity usually distracts parties from what actually drives returns, getting lost in mini trade-offs while gradually chipping away at their collective trust. Death by a thousand negotiations. What Doesn't Tend To Work (and why): 1. Ratchets & promotes encourage short-term thinking. 2. Guaranteed exit timelines force suboptimal decisions. 3. Anti-dilution protection misaligns risk/reward. 4. Complex waterfalls nobody understands. What Actually Creates Alignment: Simple, Substantial Ownership 1. Management owns 10-20% of common equity 2. Same terms as investors (no special preferences) 3. Vests through time AND performance Co-Investment Rights 1. Ability to invest personal capital at entry price, where wealth is built Operational Autonomy 1. Freedom to execute your strategy 2. Hire your team 3. Make day-to-day decisions My general rule of thumb - would this structure make sense if we were all owning this business for 20 years? If not, it's probably misaligned. Key Questions Operators Should Ask Before Taking Capital: - Can I explain the equity structure to my spouse in 2 minutes? - Do I win only when all investors win? - Am I asking to win when investors lose? - Would I invest my own money on these same terms? If any answer is no, the structure is still too complex... The best teams I have seen didn't negotiate for protections - they negotiated for co-ownership rights (as they had conviction in the upside). They wanted the same thing investors wanted....significant equity in a growing business for as long as is practical. True alignment isn't about downside protections. It's about shared upside potential. Deutsch's Beginning of Infinity reinforces this progress needs simple systems, not complex rules. The same applies to equity structures. In private companies / PE, you're not preserving equity like a founder - all parties earn it through focused growth and expansion. The simpler the structure, the clearer the alignment over decades. What matters more - protecting yourself from failure, or partnering for success in the long run? #PrivateEquity #ManagementBuyouts #LongTermCapital

Founders, Peter Walker from Carta goes through the current market for raising Venture Capital and the dilution to expect in today’s market.

You’ve just raised your Seed round. Congrats- but now the expectations change. At Revelion, we’ve seen founders stumble post-Seed because they treat it like extended pre-seed. In reality, Seed capital is about proving scalable growth. Here’s what you should focus on after raising Seed: 🔹 Strengthen the Product. Your MVP can’t stay scrappy forever. Harden your product into a reliable v1 that users depend on. 🔹 Build Repeatable GTM. Founder hustle won’t cut it anymore. Investors expect to see a funnel forming: channels, CAC/LTV, and scalable acquisition tactics. 🔹 Track the Right Metrics. Revenue, retention, and early unit economics—not just sign-ups or vanity growth. 🔹 Prepare for Series A. Series A investors want proof of PMF + early scalability. Use Seed to gather evidence, not just to spend. Our 3-step post-Seed playbook: PMF Proof. Lock in retention + revenue traction. GTM Engine. Test channels until you find repeatability. Investor Readiness. Shape your traction story into a Series A–ready narrative. 💡 Takeaway: Seed isn’t just capital—it’s the pressure test. Founders who use Seed to prove scalability unlock Series A. Those who don’t, stall out. 👉 Founders: After raising Seed, what feels harder—strengthening the product or building the repeatable GTM engine? #SeedFunding #StartupExecution #AIStartups #SaaSStartups #VentureCapital #REVELION #REVAI

Ever heard a founder say, “We’re not ready yet. We don’t even have a product”? We hear it all the time. But here’s the reality: the best time to get investor-ready is before you have traction. Founders who wait until they’re “ready” usually end up redoing everything later like their deck, their financials, even their structure. That delay costs them 6–12 months and thousands of dollars. Getting investor-ready early isn’t premature, it’s preventive. At Startup Buddy, we help founders avoid those mistakes by showing exactly what investors look for long before the pitch begins. #StartupFunding #Founders #StartupBuddy

Earlier today I spoke with a partner at a top-tier Silicon Valley fund (north of half a billion), and we ended up talking about how much the fundraising dynamics around Y Combinator Demo Day have changed. When I went through YC back in W11, it was a very different game. Most founders were trying to find a lead who will write a big check or even take the whole round. Now, many don’t even bother. They raise entirely on SAFEs, stacking smaller checks from angels, micro-funds, and operators, and wrap up their rounds in days, sometimes before Demo Day even happens. For founders, it’s liberating. They keep momentum, avoid long diligence cycles, and go back to building. For larger funds, though, it’s become a real challenge. Writing a $2M check is hard when the entire round is already filled with dozens of smaller ones. The speed at which YC companies raise now often makes traditional processes such as reference calls, deep diligence, and IC meetings nearly impossible. The result is a widening gap between the pace at which founders raise and the pace at which most large funds are built to decide. #founder #entrepreneur #startup #venturecapital #vc #ycombinator

Dunking on YC is a sure way to get good engagement on social media But I’ve seen so many new founders fall for the trap I fell into as well and it’s two things 1️⃣ Hugging equity not realising that every new tech startup is statistically worth close to zero. Dole out the equity generously as long as there’s fair exchange of value 2️⃣ Mistaking true value in top accelerators. YC is there to teach you stuff right? So if you’re experienced you don’t need them. Very wrong. True value of top accelerators is status which in venture is everything If you’re a first time tech founder, do yourself a favour and try joining a top accelerator. The equity is worth it P.S: paying to join an accelerator is not the same

Episode 80: The Mechanics of Bridge Rounds Part 48 of the Funding Stage Strategy Series Why Bridge Rounds Exist Sometimes you’re not ready for a full Series A or Seed+ raise, but you also can’t wait. A bridge round is designed to extend your runway so you can hit the next big milestone that makes a larger round possible. When done right, it’s a lifeline. When done wrong, it signals weakness. Technical Breakdown - How Bridge Rounds Work 1 - Timing - Used when you need 6-18 months more runway before a major round - Often raised after seed, before Series A 2 - Instruments - Commonly structured as SAFEs or convertible notes - Sometimes equity at a flat valuation from your last round 3 - Participants - Usually insiders (existing investors) or close angels - Less common for new VCs unless they see a clear value inflection point ahead 4 - Size & Purpose - Typically smaller than main rounds, enough to prove traction, secure partnerships, or hit key KPIs - The goal is not indefinite survival, but momentum to the next raise Hacks for a Smart Bridge Round - Position It as Acceleration, Not Rescue: Frame it as fuel to capture an opportunity, not a band-aid for survival - Get Insider Support First: Existing investors leading signals confidence - Milestone Specificity: Define exactly what the bridge enables, e.g., "12 more months to reach $2M ARR and prepare for Series A" - Cap It Tightly: Too big a bridge can spook future investors who’ll wonder why you didn’t just raise a full round My Flyertap Example At Flyertap, I considered a bridge when we needed extra runway to lock down repeat campaign data. Framing it as "capital to hit retention proof points" made it attractive to insiders, because they saw it as de-risking the next raise, not dragging things out. Closing Thought: "A bridge should be a springboard, not a crutch." Ask yourself this question (leave a comment): If you raised a bridge today, what single milestone would you use it to prove? Next time on Startup Scaling Strategies, we’ll dive into "The Role of Advisors in Fundraising", how the right advisors can open doors, shape strategy, and add credibility to your raise. #BridgeRounds #FundraisingStrategy #StartupSuccess #FounderTips #StartupGrowth #InvestorRelations #StartupFunding #FundraisingPreparation #ScalingSmart

Our partners at Big Sky Capital VC & myself are currently helping a lot of founders navigate their fundraising rounds, and I keep seeing the same pattern. Too many great startups end up taking money from the wrong investors. It’s not always about bad intentions, it’s about misalignment. Different values. Different timelines. Different energy. And that misalignment can quietly kill even the best startups. At Big Sky Capital, we help founders raise strategically, not desperately - connecting them with investors who share their vision, pace, and conviction. Because the truth is simple: Capital isn’t neutral. It either accelerates your mission, or distorts it. Choose your partners as carefully as you choose your product. That’s how you build something that truly lasts.

I'll never understand why more startups don't have an M&A strategy. Sure, if you're raising a pre-seed round on the back of an idea - maybe M&A isn't the best idea. But if you've found what works and just need to scale then it actually makes no sense to only focus on organic growth. Acquiring a profitable, legacy player in your space gives you everything you're chasing. Extends your runway Provides more data Brings great talent And, unless you have absolutely no ability to negotiate whatsoever, Then you're buying it at a lower multiple than you're raising at. You're buying at 3-5x EBITDA and raising on 3-5x Revenue. Putting $1 in and getting $5 back. It's the best "growth hack" there is.