Before we settle on a specific Valuation, let’s first understand what ranges are typical for each stage of investment.

The video and corresponding chart indicates that average amount of Dilution startups face at each funding round. That’s the most important place to begin.

The average amount of Dilution for a startup in the Seed round is 30%. Does that means startups get away with only diluting 15% or get stuck with 40%? Yes!

Remember that investors expect a certain amount of equity for their investment, and therefore as we try to dilute less (let’s say 15%) we’re basically making it harder for investors to get comfortable with their stake.

Remember: Dilution at each stage tends to stay constant – what changes is how much we raise for that Dilution (which drives our valuation).

Let’s start off by assuming we’ll dilute 25% (if we are in a Seed Round) and then find out how that will affect our Valuation in the next exercise.