Venture Capital

The Most Popular Financing Round in 2022

The extension may be the most popular fundraising round today. You won’t find statistics detailing their rise in PitchBook or Crunchbase, but “reopening the last round” or “raising a round extension” are common words in Startupland today.

How impactful is a flat round on a company’s cap table on average?

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Round dilution from VC dollars has been declining for the past decade. These figures exclude employee stock option (ESOP) dilution.

In the last 12 years, mean seed round dilution has dropped from 25% to 12.5%. Series A has dropped from 30% to 20%; Series B from 22.5% to 12%; and Series C from 18% to 11%. Across financing rounds, dilution from capital has fallen by 30-50% in that decade.

Cumulative Dilution Points

Founded 2010 2015 2022
Seed 25% 18% 12%
Series A 30% 27% 20%
Series B 22% 20% 12%
Series C 18% 18% 12%
Total 95% 83% 57%

Here’s a table of cumulative dilution points for a hypothetical startup raising 4 rounds in one year. It’s not the implied ownership of preferred shareholders at the end of these raises. The calculation doesn’t include ESOP expansion, full investor participation in pro-rata, and other changes to the cap table.

Founders have been able to sell less of their companies to achieve fundraising milestones today than at any point in the last decade – a 40% drop in 12 years.

A round extension that sells another 15% of the company likely leaves a modern founding team with more ownership than its older brothers who were founded five and ten years ago.


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