Equity, Dilution, and SAFEs

Everyone on the team needs motivation for the long haul. A misstep at any point could lead to misalignment that’s tough to fix down the road.

What's the right founder equity split? Should it be 50/50? 60/40? 70/30?

How much equity is enough for your investors? How much equity should be allocated to advisors?

Allocating 10% to 20% of your equity to employees might seem like a lot, but with the right vesting schedule, it can become a key driver of retention and culture.

Structuring all these means preparing for dilution, every founder’s dilemma. With each funding round, it chips away at ownership, you could lose control over key decisions and the future of your startup.

So what funding instruments are you considering this year to remain afloat and keep everyone motivated?

SAFEs are a great choice. Quick, simple, and efficient. However, the choice between pre-money and post-money SAFEs can have a huge impact.

Post-money SAFEs can offer clarity to investors. But what about you?

You and your early employees take the biggest hit because post-money SAFEs don’t dilute each other, they dilute you.

So if you’re raising at a high valuation with smaller checks, post-money SAFEs can work in your favor. But if you're raising at a lower cap with larger amounts, you could end up giving away more equity than you expected.

Investors in the African ecosystem, in addition to revenue, want to see a clean cap table and a thoughtful equity plan. Too many fragmented shares can scare them away.

Are you thinking through your SAFE strategy carefully?

Are you confident that your equity split reflects the value everyone brings to the table?