A lot of entrepreneurs want to hold “at least 50 percent of the company” and don’t want to give “30 or 40 percent to a VC” in order to “be in control”.

• Keep in mind that someone is risking 10m to 20m dollars down the road, often without any securities, to make you a 100m revenue company. If you can do that without them, then do it, but do the math whether you want to share 100% of a 500k company or 10% of a 100m company. Of course sometimes you end up holding 10% of a 250k company in case of a wind down…
• Depending on your Charter and other legal documents, “Majority” and “Control” might be defined differently from common sense. For example, “Majority” might be two thirds of the board of directors. So if you’re holding more than a third of the board seats, you can block a lot of decisions and hence still have control.
• There are VCs and VCs, and you have to find out whether you are OK with the degree of control loss you will have to take, and what value you get in return. Maybe it’s a good thing to get good advice and support in go-to-market strategy and direction.

Paul Graham has an interesting survey from his companies back in December 2010 http://www.paulgraham.com/control.html showing that a lot of companies kept the control of the board or major decisions. Michel Besner on the other hand has some interesting view on losing control in January 2011 http://michelbesner.com/2011/01/30/when-the-fear-of-dilution-or-desire-to-keep-control-makes-you-a-failure/.

UPDATE: I am also waiting for a posting of Mark Suster over at http://www.bothsidesofthetable.com/ where he will show a spreadsheet on ownership and equity with four co-founders – should be pretty interesting, I’ll link to it when I see it…