It's a big chunk of equity for the money. Now, you can argue YC invests in very early stage, very high risk companies and the big chunk of equity is warranted and that's fair enough. It's still a big chunk of equity. How much equity did Andy Bechtolsheim get for his famous $100k cheque to the Google founders?
Friend, hindsight is always 20/20. We don't know for a fact whether or not Google would be worth billions if they didn't get angel investing, so that example is moot.
But we do know the rate at which startups fail. We see that everyday. If you've been involved in startups, you've experienced it. The problem is, your looking at equity as a piece of the pie, trying to keep as much pie to yourself as possible. The relative size of your slice doesn't matter. Its the absolute size of the pie that matters.
Woah now. Okay, I apologize for calling you "friend".
Fact is, we all have different risk tolerances. I can tell you to play your pocket aces aggressively, but if you want to slow play them, thats up to you.
I did my best to rationalize with you why the numbers don't matter in the big picture. The best question to ask yourself is: can I create more value than the value of the stake that I give up? If the answers yes, then give up the stake, whatever the number. Most of us believe we'll get at least equal value, and that giving up 5%-10% is worth it. Thats why the numbers mean nothing to us, we don't equate 5% to being a lot because we know our new 95% will be worth more than the previous 100%.
