Know what youre getting #startups #venturecapital #vc #investing #dilution

All right, founders. So you're chatting terms with the VC. They are ready to give you a term sheet to lead your deal. And hopefully it's on a phone call where you chat through it verbally before they actually send you a term sheet. And the biggest question I get is what exactly is dilution and how do I back into that math based on pre-money valuations and post-money? If you, let's say you're raising a $2 million seed round, that VC will give you a call and let you know that they plan to price your business at, let's say $10 million. It's super important to ask them if that is pre-money. So 10 million plus two, which is $12 million post, or if that's post-money. So $2 million and you're raising that on 12 million post. How to back into your dilution and know what kind of deal you're getting would be to take the amount you're raising. So in this case, it would be 2 million and divide that by 12 million post. And that will back into the dilution that you're taking in the round.