Depends on “what does success look like” for the Founder. But assuming the Founder acts rationally, i.e. wants to maximize her financial reward vs the effort, risk and time, the “math” works as follows: What Founder gets in her pocket = Realised Exit value (1) x Founder’s share of the company at the time of an exit (2) x time it takes to get to an exit (3) x probability of getting an exit (4)
Let’s consider 2 scenarios, A is an early stage trade sale, B is a “global category winner” On (1), A is definitely smaller, B can be much higher For (2), once you start aiming for a high level, you will need a lot of money, usually in multiple rounds, resulting in the Founder’s stake diluting to a fraction of what it was initially. A and B will have very different values, A being better for the Founder.
On (3), becoming a global champion is never cheap, easy or quick. You will expect this to take time, and in reality it will take even longer. Life goes by while you fight for your startup. A and B have very different values, A being better for the Founder. On (4), the higher you aim, the harder it becomes – if you are lucky to get to the finals of the Olympics, your competitors have all worked at least as hard as you and have sacrificed everything to be able to be the best. The odds of winning are slim. A and B have very different values, A being better for the Founder.
Do the math using the values you feel are right, and see what it looks like. Literature (business books written by entrepreneurs) gives very straight advice: take A! Example: Rand Fishkin (Lost & Founder) could have sold his company fairly early for roughly 20M, and he would have pocketed at least 60% of that. He didn’t take it. Years, and many strongly diluting funding rounds later, his company is much bigger. But there will never be an exit that would pocket him the 12M he once said no to. He regrets deeply and wants to share this with fellow founders so that they would not make the same mistake.
Revenue funded – often the most beneficial to the founders. Founders keep the full control of the company and have all options available further down the line, drawback is you have to make ends meet with less money available.
Externally funded - typically by FFF, angels or industry specific investors. Founders are still in drivers seat, but get additional financial resources. This type of money does not seek for the most aggressive multiplier with a double or nothing strategy but is more about making carefully vetted bets.
Venture funded – the high stakes game. This is the most aggressive money which is seeking for very fast growth with a very high mortality rate.
What should be noted is that all 3 strategies do allow every company to realise their full potential, there are many successful companies (even unicorn level) who have never taken VC money. The amount of money raised correlates poorly with the eventual success.