Russ’s counteroffer presented a sliver of hope. By halving our effective valuation, we would raise enough to at least pay ourselves and keep the machine going. We’d sell way more of the company in a seed round (about 22 percent) than was typical, and this would raise eyebrows when it came time to raise a series A. Investors don’t like it when a prior round of investors has bought a huge part of the company. It means that either they have to take down less of the company in their round, or the founders have to give up a lot of their share to top up the new investors, and hence lessen their
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Why a higher cap in seed round is important
