Quora Answer: How Much of a Startup Should be Given Up to Investors?

The following is my answer to a Quora question: “How much of a startup should be given up to angel investors for collateral?”

Before you come to that decision, both founders and the first mover investors need to agree on the valuation of the company.  This would be an extent discussion.  Once that is agreed upon, then you can come to a decision on how much equity to give up for investment.  Because they are first movers, they take the most risk, and may request some discount on that collateral. 

The first consideration here is to ensure that you give up just enough equity to receive funding, but not so much that you lose majority control.  You also need to reserve space for further rounds of funding.  1^st mover investors normally have provisions against splitting their shares, so you need to carefully manage the capitalisation table across three or more rounds of funding.