Founder dilution: how much of the company a founder keeps after the rounds
Every round is a sale of part of the company. You get money, the investor gets a share, and your share gets smaller. That's dilution. In itself it isn't bad: it's better to own 60% of a big company than 100% of a closed one. It's bad when nobody counts it in advance.
How it's calculated
The founder's new share = old share × (1 − share given up in the round).
An example. You have 100%. First round — you gave up 20%, 80% left. Second — another 20%, but of the whole company, not of your 80%: 80% × 0.8 = 64% left. A third round on the same terms — 51%.
100% → 80% → 64% → 51%
Three rounds of twenty percent, and you barely control the company, though you never gave up more than a fifth.
Employee options
Equity goes not only to investors. A strong engineer is often kept not with money but with a piece of the company. Every such piece dilutes the founders too. Individually it's a few percent, but over a few years a 10–15% pool adds up.
The amount or the percentage
A term sheet has two key numbers: how much they give and for what share. Beginners look at the first, the experienced at the second. $10 million for 10% and $10 million for 25% are completely different deals: in the second you sold the company two and a half times cheaper.
What the percentage depends on:
- The strength of the story. Growth, customer retention, product-market fit, revenue size.
- Time. A company that needs money in a month negotiates badly. More in Runway: when to start raising.
- The market. When investors are cautious, the same numbers are worth less.
To haggle or not
You can and should haggle, but it isn't free. Sometimes the fund moves — and you get more money for a smaller share. Sometimes the fund walks away, and the offer is gone. If there are no other offers and you have six months of money, the risk may be too high.
How it ends
Equity matters at two moments: when decisions are made and when the company is sold. In a sale, the founder gets not the company's value but their share of it. A company sold for a billion gives a founder with 15% a hundred and fifty million, not a billion.
How it works in Runway 200
In the game you start with the whole company. Going to investors brings either rejections or a term sheet: an amount and a share, usually twelve to twenty-two percent. The amount depends on your revenue and the strength of your story: growth, segment fit, number of paying customers, market mood, reputation and churn.
A term sheet can be signed, declined, or haggled over. Haggling works less than half the time: then you get a third more money for a slightly smaller share. Otherwise the fund withdraws the offer.
Equity goes to employees too: when an engineer is being poached, you can keep them with 1.2% of the company instead of a raise. Every such decision is visible on the screen — how much the founders had and how much they have now.
In the finale, if you get to a sale, the result is counted just as in life: “The founders got so much — such-and-such percent of what they built.”
Try it yourself: the first ten weeks are free, no sign-up. See how much of the company you keep by the end of the run.