The number most US seed rounds settle on is 15 to 25 percent for the round as a whole. Below about 10 percent, professional seed funds usually pass — their ownership is too small to matter to fund returns. Above about 30 percent, later investors start worrying that founders are too diluted to stay motivated through a Series A and B. That band is not a rule, but it is where the market clears, and it means the real negotiation is almost never over the percentage. It is over how much you raise and at what valuation, because those two numbers produce the percentage.

The Arithmetic That Sets the Percentage

Investor ownership equals the amount invested divided by the post-money valuation. Raise $2.5 million on a $10 million pre-money and the post-money is $12.5 million, so the round buys 20 percent. Raise the same $2.5 million on a $7.5 million pre-money and you have sold 25 percent.

Founders fixate on valuation and under-think the raise amount. Raising more than you need at a fixed valuation directly buys dilution; raising too little buys a shorter runway and a down round, which is far more expensive. Size the round to reach a milestone that supports the next valuation — for hardware, that usually means a working DVT build, a real cost model, and either pilot customers or preorders. Sizing methodology is in how much money to raise for a physical product, and how the percentages compound across rounds is worked through in equity dilution explained.

What US Seed Rounds Actually Look Like

  • Pre-seed / friends and family: $150,000 to $750,000, typically 5 to 12 percent, usually on a SAFE.
  • Angel round: $250,000 to $1.5 million, 8 to 15 percent, often several individuals writing $25,000 to $150,000 checks.
  • Institutional seed: $1.5 million to $4 million, 15 to 25 percent, one lead taking most of it plus a syndicate.
  • Seed extension: $500,000 to $1.5 million at a modest step-up when the milestone slipped, adding another 5 to 10 percent.

A single angel rarely takes more than a few percent alone; an individual writing $50,000 into a $2.5 million round is buying well under one percent. If one seed investor asks for 35 or 40 percent, treat it as a signal about that investor rather than about your company. At that level a founding team of two is under 50 percent before a Series A has even been discussed, and the next round becomes structurally hard to raise.

SAFEs and Caps: Dilution You Cannot See Yet

Most US seed money now arrives on a SAFE rather than as priced equity. That is faster and cheaper — no valuation negotiation, no charter amendment, legal fees in the low thousands instead of $30,000 — but it hides the dilution until conversion. The comparison with the older instrument is in SAFE versus convertible note.

A post-money SAFE, now the common form, states the ownership it buys directly: $1 million on an $8 million post-money cap converts to 12.5 percent, and subsequent SAFEs dilute the founders rather than the earlier holders. A pre-money SAFE spreads dilution across everyone, which is friendlier to founders and harder to model — the difference is unpacked in pre-money versus post-money valuation.

The failure mode is stacking. Four SAFEs at different caps, signed months apart, each looking small in isolation, converting together at the Series A into 38 percent of the company. Maintain a conversion model from the first instrument and update it every time you sign — the discipline described in keeping a clean cap table.

The Option Pool Shuffle

This is where founders quietly lose several points they never negotiated. The term sheet says the company will have a 12 percent option pool available at closing, and the pool comes out of the pre-money valuation. That means it dilutes existing shareholders only — you — not the incoming investor.

Concretely: $2 million on an $8 million pre-money with no pool means investors own 20 percent and founders 80 percent. Add a 12 percent post-closing pool carved from pre-money and founders drop to roughly 68 percent while investors still hold 20. The pool cost you twelve points, not nine-and-change split proportionally.

Two defenses. First, negotiate the pool against an actual hiring plan: list the roles you will hire before the next round with the grant each needs, and if that totals 7 percent, argue for 7, not 15. The grant sizes that support that argument are in employee stock options at a startup. Second, ask that any pool increase come out of post-money so both sides share it.

What Changes for Hardware

Physical products consume more capital before revenue than software does, which means more rounds and more total dilution over the life of the company. Tooling, certification, and inventory are real cash with no software equivalent. Expect a hardware founding team to hold less at Series A than a comparable software team at the same stage — the structural reasons are laid out in why hardware is harder to fund than software.

Two counter-levers matter. Non-dilutive money — federal grants, preorders, purchase order financing — reduces the equity you sell for the same runway. And staging: raising $1.2 million to reach a validated DVT build, then $3 million at a higher valuation, costs less ownership than raising $4.2 million today.

Terms That Cost More Than the Percentage

A 22 percent round with clean terms beats an 18 percent round carrying a participating preference, a 2x liquidation preference, full-ratchet anti-dilution, or a board seat that gives the investor a veto on your next raise. Founders negotiate the headline number and sign the structure without modeling an exit at $40 million, where preferences decide who actually gets paid. Read every clause against a mediocre outcome, not a great one — the checklist is in the term sheet explained.

A Reasonable Target

Aim to hold, as a founding team, 60 to 70 percent after the seed round including the option pool. Below 50 percent at seed, a Series A gets harder because investors model forward and see a founding team with little left. If the numbers do not reach that, the fix is usually raising less against a tighter milestone rather than pushing valuation past what your traction supports.

Build the Milestone the Valuation Depends On

Projects House takes hardware ventures from concept to a working, manufacturable build — the evidence that moves a seed valuation from a story to a number. Tell us your product stage and your fundraising timeline through our contact form.