But with early-stage investing, it is possible. It just depends on timing.

Let’s break it down:

Imagine you’re backing a startup in its Pre-seed round at a $5M valuation, securing a solid 15% equity. Now, picture joining in later, during their Series A at a $60M valuation—your stake might only reach 3%.

Now let’s fast forward to the big exit at $400M:

→ Pre-seed at $5M Valuation: With a 15% slice, your exit return would be an impressive $60M. That’s the kind of payoff that justifies the early risk.

→ Series A at $60M Valuation: Your 3% stake at this stage nets $12M. Still a solid return, but a fraction of the earlier reward.

But there’s more to consider beyond these numbers. Factors like dilution and pro-rata rights come into play. If you don’t secure your position or reinvest in later rounds, your stake might shrink, and the return diminishes. Pro-rata rights can protect your equity as the startup scales.

Getting in early? Higher risk, higher reward. But it takes strategy to navigate dilution and maximize those returns.

So, what’s your move? 15% upfront or 3% down the line?
Timing. Changes. Everything

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Photo: Veronika Glushkova and I’s monthly Investor relations strategy meeting while enjoying some Lebanese food !