How much equity should startup founders give away? A strategic guide according to Carta

One of the most critical decisions startup founders face is how much equity to give away when raising capital or bringing on key stakeholders. Equity allocation impacts long-term control, fundraising potential, and team motivation. So, how much should founders part with at different stages of their journey? Let’s break it down using Carta-backed data.

1. The golden rule: preserve ownership while driving growth

Equity is your most valuable asset as a founder. The key is to strike a balance between retaining enough ownership for control and motivation while giving away enough to attract investors and key hires. For more detailed guidance on structuring startup equity, check out Carta’s Founder Equity Guide.

2. Standard equity breakdown by stage

While every startup is unique, the following benchmarks provide a rough guide:

• Pre-seed: Founders typically retain 80-90% of equity. Angel investors or early advisors may take 5-15% in total.
• Seed Round: Investors typically take 10-25%, leaving founders with around 60-80%.
• Series A: VCs generally take another 15-25%, reducing founder ownership to around 50-65%.
• Later Rounds (Series B+): Further dilution occurs, with founders often holding 30-50% by Series B and 20-40% by Series C.

Download Carta’s Founder Ownership Report 2025 to view the latest market data.

3. The employee equity pool: attracting top talent

Most startups set aside 10-20% of equity for an employee stock option pool (ESOP) to attract and retain key employees. This is often created before a seed or Series A round. Check out Carta and Peter Walker’s insights on employees and option pools for more free resources on how to structure these pools effectively.

4. How much equity to give to advisors?

Advisors typically receive 0.07-0.25% equity, depending on their involvement, reputation, and the startup’s stage. Equity is often structured as vesting over time to ensure continued contributions.

5. Co-founder equity splits: what’s fair?

Co-founders often split equity based on factors such as contribution, experience, and role. A common mistake is a 50/50 split without discussing long-term commitment or responsibilities. Tools like vesting schedules (e.g., 4-year vesting with a 1-year cliff) help ensure fairness. To better understand vesting structures, read Stock vesting by Carta.

6. Understanding valuations and avoiding over-dilution

Valuation plays a crucial role in determining how much equity founders give away. A higher valuation means less dilution when raising capital, while a lower valuation requires giving away more equity for the same amount of funding. Founders should consider factors such as market conditions, revenue growth, and investor appetite when negotiating valuations. Tools like Carta’s State of Private Markets can help founders benchmark their startup's worth.

While raising capital is essential, too much dilution can leave founders with little control or upside. Founders should:

• Be strategic about when and how much they raise.
• Consider alternative funding sources (e.g., revenue-based financing, grants).
• Negotiate valuation carefully to minimize unnecessary dilution.

7. Equity calculator: planning your stake

Using an equity dilution calculator (like the one on Capwave AI) can help founders forecast their ownership across funding rounds and avoid surprises.

Final thoughts: play the long game

Giving away equity is inevitable, but smart founders ensure it’s done strategically. Retaining a meaningful stake while securing the right investors, team, and advisors will position your startup for long-term success.

Need help modeling your equity distribution? Capwave AI offers tools and insights to help founders navigate fundraising and dilution effectively.