Ask HN: How the hell Zuck holds 28.4% after all those rounds from VCs?

https://news.ycombinator.com/item?id=3540667

by sinzone • 14 years ago

7 3 14 years ago

news.ycombinator.com

In every round of financing it's not only about money raised and valuation as many may think; but the story is way more complicated. Especially because of all the pro-rata rights accumulated by investors over time, the option pool for employees, etc.

This would have diluted Zuck and the other founders in a more substantial way.

Look at Google: 1 seed round + 1 series A and Larry and Sergey have only 10% each. Or Groupon, Zynga, etc - the common is between 7 and 15% of the company for a founder that approach an IPO.

somagrand• 14 years ago

Simple raising money on increased value of the company. If the company is dramatically increasing its value every round little dilution occurs.

kls• 14 years ago

It cannot be taken for granted that Mark was fairly shrewd at business in his own right. I see shades of Gate's more than I see shades of Larry or Sergey. I was clear for day one that Mark knew he was onto something and that he would be willing to walk away from the table. When you have the capability to do that you set the terms. After possible the first round he no longer was in absolute need of capital. He had the users and could have chosen the slow growth option. After MySpace did themselves in, he was holding all the cards because the competition was then well in the rear-view after that event.

tbrooks• 14 years ago

By Sean Parker's advice.

Ask HN: How the hell Zuck holds 28.4% after all those rounds from VCs?

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