How Much Equity Should You Give Away at Pre-Seed?
Most pre-seed rounds in Europe land somewhere between 10% and 20% of the company. But the range is the least useful part of the answer, because your stake is not negotiated directly. It falls out of two numbers: how much you raise, and at what valuation. High-Tech Gründerfonds publishes a sweet spot of "€800,000+" for its initial pre-seed and seed cheques, and that single figure tells you more about the resulting equity than any benchmark percentage, once you know the valuation it is paired with.
Founders who negotiate the percentage are negotiating the output. Founders who negotiate the raise amount and the valuation are negotiating the inputs. This article is about the inputs, and about the one mechanism that quietly moves the answer by several points without anyone appearing to change the terms.
The arithmetic, which is not negotiable
Equity sold is the investment divided by the post-money valuation.
equity sold = investment / post-money valuationpost-money = pre-money + investmentRaise €800K on a €4.2M pre-money and the post-money is €5M, so the round costs 16% of the company. Raise the same €800K on a €7.2M pre-money and the post-money is €8M, so it costs 10%.
Same cheque. Six points of difference. Nothing about the percentage was discussed.
This is why "how much equity should I give away" is the wrong question to bring into a first meeting. The right questions are how much you actually need to reach your next milestone, and what evidence supports the valuation you are asking for.
How much do you actually need
Raising more than you need is not free, and raising too little is worse.
Work backwards from the milestone that makes your next round raisable, not from a number that sounds respectable. For most pre-seed companies that milestone is evidence that the product works and that someone will pay for it. Then add the time it takes to raise the next round, which is rarely under four months and often closer to six.
A company that raises 12 months of runway has about six months of building before fundraising consumes the founders again. Eighteen months is usually the honest minimum at pre-seed, and the extra six months of runway typically costs less in dilution than the down round or bridge that a short runway produces.
The failure mode we see most often in our own inbound is a raise sized to a round label rather than to a plan. "We are raising €1M because that is a pre-seed" is not a reason. "We are raising €1.1M because it funds four hires and 18 months to €40K MRR" is one, and it is also the sentence that makes the valuation defensible.
The option pool shuffle, which moves the number quietly
This is where founders lose equity they did not know they were agreeing to.
Investors will ask you to set aside an option pool for future hires, typically 10% to 15% at pre-seed. The question that matters is whether that pool is created before the investment or after, because the answer determines who pays for it.
If the pool is carved out of the pre-money, existing shareholders fund it entirely. That means you. If it is created post-money, everyone including the new investor is diluted proportionally.
Take a €1M raise at a €4M pre-money, with a 10% pool.
Pool created post-money. Post-money is €5M, investor takes 20%, founders hold 80%, then the 10% pool dilutes both: founders end at 72%, investor at 18%.
Pool carved out of pre-money. The pool comes out of the €4M before the investor arrives, so the founders fund all of it. Founders end at 70%, investor at 20%, pool at 10%. The investor's stake is protected and yours absorbed the pool.
Two points of founder equity on this example, and the gap grows with the pool size. It is a standard term, not a trick, and it is usually negotiable at the margin. What is not acceptable is agreeing to it without noticing, then discovering at signing that your cap table looks different from the one in your model.
Ask one question when a pool is proposed: is this pre-money or post-money, and what hires is it sized for? A 15% pool with no hiring plan attached is a valuation reduction wearing a different hat.
What it costs across the whole journey
Pre-seed dilution is not a single event, and judging it in isolation leads founders to optimise the wrong round.
A reasonably common European path looks like this:
- Start: founders after 100%
- Pre-seed: sold 15%, founders after 85%
- Seed: sold 18%, founders after 70%
- Series A: sold 20%, founders after 56%
- Option pool top-ups: sold ~8% total, founders after ~51%
Roughly half the company by Series A, before any secondary or founder departures. That is a normal outcome rather than a bad one.
The useful implication: a few points at pre-seed matter less than most founders fear, and far less than the quality of the investor. Three points of extra dilution at pre-seed costs you 1.8 points by Series A, because everything dilutes proportionally afterwards. An investor who helps you raise a better seed round at a better valuation recovers that several times over.
What does real damage is not a slightly expensive first round. It is a structurally broken cap table: a departed co-founder holding 30% with no vesting, an agency holding equity for work already delivered, or a pre-seed round priced so high that the seed becomes a down round.
Two things that are more expensive than dilution
Founder vesting that does not exist. If one of three co-founders leaves in month eight holding a third of the company outright, every subsequent investor sees a cap table with a large passive holder and most will decline. Standard terms are four years with a one-year cliff, and they protect the founders who stay far more than they protect investors.
A valuation your next round cannot clear. Raising at a pre-money that assumes 18 months of flawless execution means that merely good execution produces a flat or down round. The down round costs more in dilution, in anti-dilution adjustments and in momentum than the extra points you avoided at pre-seed. Price the round you can grow into.
European specifics worth knowing
Funds are smaller, so ownership targets bite earlier. A fund deploying €60M across 25 companies needs meaningful ownership in each one to return the fund. European pre-seed investors therefore often need a larger percentage from a smaller cheque than their US equivalents, which is arithmetic rather than aggression.
Convertible instruments are common at the earliest stage and defer the question rather than answering it. A convertible loan or SAFE sets no price today, but the cap sets the worst case for you. Model the conversion at the cap before signing, because that is the number you will live with if things go well.
Public co-investment changes the shape of a round. Several European markets have public or semi-public co-investors that match private money. They rarely lead on price, but they can increase the total raised without a proportional increase in dilution. Worth checking in your own jurisdiction before assuming the round has to be entirely private.
Frequently asked questions
Is 25% too much to give away at pre-seed? It is above the usual range and worth examining, but it is not automatically wrong. If it buys 24 months of runway and an investor who materially improves your seed round, it can be better than 15% that buys 12 months. The question is what the extra equity is purchasing.
Should I negotiate the percentage or the valuation? The valuation and the raise amount, because the percentage is their output. Negotiating the percentage directly usually means one of the two inputs is being adjusted without being discussed.
What is a normal option pool at pre-seed? Ten to fifteen percent is typical. What matters more than the size is whether it sits pre-money or post-money, and whether it is sized against an actual hiring plan.
Does a convertible loan avoid dilution? No, it defers it. The dilution arrives at conversion, usually at the cap if the company has done well. Model that outcome before you sign rather than after.
How much equity should co-founders hold relative to each other? That is a separate and more consequential question than investor dilution, and it is the one most likely to end a company. Decide it early, write it down, and vest it. See our guide to pre-seed versus seed funding for how these decisions compound across rounds.
If you are raising now and want a view on whether your round is sized and priced sensibly, Pitchdrive invests at pre-seed and seed, in Europe and beyond, with cheques of roughly €250K to €2M. We are 100% entrepreneur-backed, which mostly means the people deciding have sat on your side of this conversation.