Dear SaaStr: We sold 30% of our Company Pre-Money During our Friends and Family Round. Will VCs Care?

No.

In the old days, 30% in your friends-and-family round was pretty common.  It may become common again, as times are tougher for many these days in venture.

What VCs will want to make sure is that:

• The founders are adequately incented going forward
• The angels before them, as a group, don’t have control or blocking rights over future financings.
• The cap table is “normal”

So as a rough rule, if you’ve sold > 50% of the company before any traditional venture money comes in, and/or given up any big control rights … then most VCs will want to restructure things, one way or another.

But even then, they’ll just tell you.  “We’ll need to change X and Y before we can invest.”

Just identify any issues up front and share that you’ll work on them together.