Babak Nivi Co-Founder AngelList and Venture Hacks and angel investor
When raising money in a seed round: “ Take as much money as you can while keeping dilution between 15-30% (10%-20% of the dilution goes to investors and 5%-10% goes to the option pool).
Compare this to a Series A which might have 30%-55% dilution. (20%-40% of the dilution goes to investors and 10%-15% goes to the option pool.)
A seed round can pay for itself if the quality of your investors and progress brings your eventual Series A dilution down from 55% to 30% (for the same amount of Series A cash).
Don’t over-optimize your dilution. Raising money is often harder than you expect, especially for first-time entrepreneurs.” Babak Nivi, Venture Hacks How do we set the valuation for a seed round? April 17, 2008; http://venturehacks.com/topics/dilution