We walked away from a seed round because of its price. The founder had a strong team and a business we could see working, but the valuation rested on a story that only made sense if you knew the team and the industry intimately, and even then it required a good deal of goodwill. Neither the equity story nor the revenue covered the number, and the founder did not see why a more modest price would serve both of us.
We have had that conversation more than once, and the founder's instinct is easy to defend: the higher the price, the less of the company you give away. What that logic forgets is that somebody has to pay an even higher price eighteen months later.
What a Seed Price Promises
A seed valuation is a promise about what the company will be worth in eighteen months. The next investor will read the seed price as a floor and will expect the company to have grown well beyond it. A founder who negotiates a high seed price has, in effect, signed up for a steeper climb with the same amount of time and money.
For orientation, Equidam's data puts the median early-stage pre-money valuation in Europe at around USD 5 million in 2025, or roughly CHF 4 million. Both prices in our example sit above it: the first by about half, and the second at roughly three times the median, which is where an ambitious seed round in Zurich tends to land today.
On Paper, the Founder Is Right
Take two founders with identical companies. Both raise CHF 1.5 million at seed, one at a pre-money valuation of CHF 6 million and the other at CHF 12 million. Eighteen months later both raise CHF 4 million at Series A, at whatever price their progress supports.
| Series A pre-money | Seed at CHF 6m | Seed at CHF 12m |
|---|---|---|
| CHF 8m | 53.3% (flat round) | 59.3% (down round) |
| CHF 18m | 65.5% (2.4x step-up) | 72.7% (1.3x step-up) |
| CHF 30m | 70.6% (4.0x step-up) | 78.4% (2.2x step-up) |
The founder who took the higher seed price keeps more of the company in every scenario, by six to eight percentage points, even when the Series A comes in below the seed price. So the founders who push for the highest number are right about the dilution, and we would rather admit that than pretend otherwise.
What the Table Leaves Out
The table assumes that every one of those Series A rounds happens. In practice the price of the next round depends on how the step-up reads to a new investor, and the same company looks very different depending on where the seed price was set.
2.4xmore than doubledfounders keep 65.5%
1.3xbarely movedfounders keep 72.7%
At a Series A of CHF 18 million, the first founder presents a company that has more than doubled in value since seed, while the second presents one that has barely moved, with identical traction behind both. The first round reads as momentum and the second as a stall, and new investors price stalls harshly or pass on them altogether.
The advantage in the table is also narrower than it looks, because the second founder keeps more only while the Series A clears roughly CHF 11 million. If new investors price the stall below that, the founder who held out for CHF 12 million ends up with less of the company than the one who took CHF 6 million and grew into a Series A at CHF 18 million.
The down round in the bottom row of the second column is the expensive case, and its cost goes well beyond the percentages. Many such rounds never close, which leaves the company to bridge on worse terms or not at all. Those that do close often bring anti-dilution adjustments, a fresh option pool carved out of the founders' stake, employees holding options that are worth nothing, and a label that follows the company into every later conversation.
Our Interest, Stated Plainly
We argue for a reasonable price because of two interests of our own. The first is that the right team stays on board for as long as it takes to deliver, and one of the strongest levers for that is ownership, through vested equity and employee share options. A founding team that dilutes itself too far loses its skin in the game, so we want founders to hold close to 50 percent at Series A, and well above 30 percent at the very least. Carta's data on more than 10,000 US companies that raised priced rounds between 2020 and 2024 puts the median founding team of a digital company at around 37 percent after Series A, with only the top quarter at 48 percent or more, so this is an ambitious target, and steady up rounds are how it is reached.
The second is liquidity. For us that rarely means the sale of the company. More often it means selling our position in a secondary transaction along the way, and secondary buyers pay for momentum and growth. A down round removes both, and with them our route to an exit, so a price that sets the company up to climb serves the founder and us at the same time.
Caps Carry the Same Promise
Much of our early-stage investing is done through convertible loans with a valuation cap or a discount, and the same logic applies. Founders and the next investors read a cap as a valuation, whatever the documents say. A cap set too high makes the discount the only term that matters, gives early backers little in return for taking the earliest risk, and leaves the priced round with the same bar to clear that a high seed price would have set. When several notes stack up with caps set at different times, the problem compounds.
When a High Price Is Right
There are cases where the higher number is the correct one. When several credible investors compete for the same round, the price is set by that competition, and turning it down helps nobody. When traction is already ahead of what the market normally sees at seed, a higher valuation is simply the market catching up. In both cases the price comes with the evidence to support the next round, which was the missing piece in the deal we walked away from.
Price the Round for the Next One
The question for a founder at seed is what price leaves the company room to show clear progress by the time it next raises. That price is usually lower than the highest number on the table, and the difference buys a Series A pitch about growth, which beats an hour spent explaining why the company never grew into its seed valuation.
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