Avoid Giving Up Too Much Equity in the Early Stages

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In the early stages of a company, fundraisers should focus on the minimum amount, not the maximum.

The valuation is low, and so the founders encounter greater dilution.

The majority of the fundraise should be done later when the valuation has increased.

Each round will cost the founder 25% of their equity.

Most use convertible notes.

Beware of using the convertible note as a credit card in which the founder keeps raising funds on it.

At the Series A level, venture capital will check to see if there's enough equity left for their investment.

The VC will also want to see enough equity left in the round for the founders.

If the founders have given up too much equity in the early stages, then investors will not fund the startup.

Founders should keep track of the equity they are giving up with convertible notes.

They should have at least 60% of the equity by the time they approach a Series A investor.

Consider these points in negotiating early-stage rounds of funding.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

On this episode of Investor Connect, Hall welcomes Dave Sanders, angel investor and Membership Chair at SAC Angels. Located in El Dorado Hills, California, Sac Angels is a long-running Sacramento-based angel group that's been investing in high-potential early-stage startups since the late 1990s, with about 70 members completing roughly 15–20 transactions a year. The group focuses primarily on broad-based technology (about 70–80%) across the western US while remaining open to opportunities nationwide, and it supports founders not only with capital but also with mentorship, connections, and experienced operator guidance through the early, messy stages of growth.

Dave shares how Sac Angels typically invests at the seed stage (with some Series A), with common check sizes of $100K–$250K and rounds often raising $750K–$2.5M. He explains how their multi-class LLC structure allows them to write one check to keep the cap table clean and encourages more participation from members, and he notes SAC Angels' collaborative approach with other groups and accelerators, including Berkeley SkyDeck and the 14-group NSYNC Angels network. Dave also highlights their ability to move quickly on strong, led deals—sometimes writing checks in under 30 days, and in one case in three days. Dave is an active angel investor who helps source, evaluate, and co-invest in seed-stage companies through SAC Angels. He also serves as a GP in a micro fund and has invested across dozens of companies, sharing lessons learned about portfolio construction and the importance of diversification in an asset class where outcomes are hard to predict.

With deep experience working with founders, Dave spends significant time coaching and mentoring companies post-investment, using his network to open doors and make strategic connections. He emphasizes that successful companies often differentiate early through strong teams, clean deal terms, crisp storytelling, and the ability to raise follow-on capital—since many startups ultimately succeed or fail based on continued access to funding. Dave discusses what SAC Angels looks for in founders, themes they find compelling today, including AI applied to targeted workflows and health tech, and how syndication and relationships drive access to quality deals. He also shares advice for founders raising their first round—question whether venture is the right path, stay lean, and show real traction—and for new angels to join a group, build a diversified portfolio of 15–20 investments over four to five years, and target disciplined, portfolio-based returns.

Visit SAC Angels at sacangels.com/

Reach out to at www.linkedin.com/company/sacramento-angels/

________________________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https:/_/tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.

There Are Many Scenarios in Fundraising

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

In fundraising, there are many scenarios and strategies a founder can use.

Here are several factors that impact which strategy to use:

The current market for funding.

In up markets, one can raise more funding and at a faster pace.

The strength of the startup.

Startups with traction and a great team can command greater fundraises.

The target growth rate of the company.

The higher the growth, the greater the fundraising goal.

The type of investor sought.

There are angels, venture capitalists, and family offices to consider.

Angels can be easier funding to acquire.

VCs can invest greater amounts of money.

Family offices can be patient money.

Throughout the campaign, consider which strategy and scenario to use at each stage.

In pitching, be sure not to play out all the options to an investor, as this will be confusing.

Choose a scenario and play it out with the investor.

Consider these points in choosing the strategy and scenario of your fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.