deaquity

plus a trip to SF Feb 6-14

Author

Jorian Hoover
January 20, 2026

Hey friends, it’s Jorian—welcome to Into the Ring. I’m a startup fundraising coach and have worked with 50+ founders who’ve raised over $190M.

I’ll be in SF a couple weeks from now: Feb 6-14th! Give me a shout if you’d like to grab a coffee or meal — would love to meet up with some readers of this newsletter and trade notes on the startup fundraising environment.

For today’s newsletter, I’ll give my quick take on building end-to-end solutions in AI, review the latest fundraising rounds Tier 1 VCs led last week, share my recommended VC essays & podcast episodes, and give a deep dive on dead equity when fundraising.

And thank you for being part of this Into the Ring tribe of 1.8K+ startup founders and operators/investors from OpenAI, Anthropic, a16z, Lightspeed, etc. If you think someone else might like this newsletter, they can sign up here.

Now onto today’s newsletter!

In today’s issue:

  1. Jorian’s 1min take: end-to-end AI solutions

  2. What funding rounds did Tier 1 VCs lead last week (Jan 10-16, 2026)

  3. This week’s recommended VC essays & podcast episodes

  4. Today’s deep dive on how to fundraise like a pro: dead equity

1. Jorian’s 1min take: end-to-end vs point solution AI

Over the past few years, IT departments across medium-sized businesses and the enterprise have gone on a shopping spree for AI solutions. Companies don’t want to be left in the dust in today’s AI transformation.

But many of these companies have been left with AI point solution fatigue—dozens of AI solutions that don’t talk to each other or work with existing legacy systems.

So more and more, I’m seeing top founders who are building end-to-end AI solutions for their customers. Similar to how AWS/Azure/GCP moved an entire company’s infrastructure to the cloud, these startups are trying to shift all of a company’s workloads to AI.

The downsides are clear — it’s a bolder ambition, brings with it more of a cold-start problem, and each feature may be worse than the point solution alternative.

But the upsides are also evident — that bolder ambition brings bigger upside, the customer only has one vendor, and AI workflows can operate seamlessly across the company.

Of course I’ve oversimplified things here to make a point, but I’d love to hear from you if you’re also seeing an increase in end-to-end AI solution startups?

3. This week’s recommended VC essays & podcast episodes

  • Podcast: “Why VCs think consumer AI hasn’t lived up to the hype” (link) on the StrictlyVC pod, with Chi-Hua Chien of Goodwater Capital & Elizabeth Weil of Scribble Ventures. Both of these investors are at the forefront of consumer investing—Elizabeth on the pre-seed side and Chi-Hua on the later-stage side, and I loved their take on the consumer AI market.

  • Podcast: “Grammarly Acquires Superhuman: AI Email, UX Moats & Building AI-Native Products” (link) on the VC(dot)fm pod, with Loïc Houssier of Superhuman. This podcast went deep on AI embedded into workflows as opposed to standalone AI tools.

  • Podcast: “a16z’s $15BN Fundraise” (link) on the 20VC pod, with Harry Stebbings interviewing Alex Rampell of a16z. Andreessen Horowitz (a16z) just raised a massive set of funds so I enjoyed hearing Alex, a GP at a16z, talk through how they think about returns.

  • Newsletter: “Inside Archer Aviation” (link) from the Sourcery newsletter by Molly O’Shea. This was a cool one regarding what Archer is building—a new category of aviation, potentially delivering air taxis. Just a reminder of the cool stuff startups & growth-stage companies are building :)

  • Newsletter: “Beliefs Outrun Facts” (link) by William Quist of Slow Ventures. Founders are increasingly realizing that getting distribution is important, so they’re turning to places like LinkedIn to broadcast their message. But it often falls flat and fails to attract customers. Quist shares his two cents on what founders should do instead.

4. Today's Deep Dive on How to Fundraise Like a Pro: dead equity

VCs don’t like dead equity on a cap table. What does that mean?

Dead equity is when someone or a group owns a stake in your business but is no longer providing ongoing value to the business. Examples include:

  1. a co-founder who left acrimoniously and still owns 10% of the company

  2. an incubator who spun out your startup and is holding onto 40% of the company

  3. an angel investor who you gave too generous of terms to and who owns 15% of the company

(note: just because someone owns a lot of equity does not mean it’s dead equity. It depends on if that person/group is contributing to the ongoing success of the business, and if there’s a sense of “fairness” to how they received their ownership)

The issue with dead equity

Why do VCs dislike dead equity?

First, it crowds out other potential investors. Any equity stake held by individuals or groups no longer contributing to the startup is a stake that cannot be owned by someone else.

Second, if someone is checked out from the startup and is no longer contributing, their incentives are not aligned with the startup. Even worse, if the breakup was acrimonious, they could even try to hold the startup hostage in the future.

Third, there’s a nasty sense of unfairness for the remaining parties who are still contributing to the startup. If someone received a meaningful stake but is no longer helping out, that does not feel fair.

Deal with dead equity before you fundraise

If you have dead equity on your cap table, you’re not alone. It is common for startups to have dead equity because you cannot predict the future, and in the early days of building founders are more liberal with giving out equity.

Before you fundraise, you want to assess if your dead equity will be a problem for VCs. If it’s just a couple percentage points floating around, then it’s likely not a problem. But if you have 20% owned by a co-founder who left acrimoniously, that can be a red flag. So check with friendly investors & your startup lawyer to get a gauge on how bad your dead equity problem is.

Dealing with dead equity is usually not easy because it deals with human relationships and requires the other side to give up something. You’ll typically want to engage your startup lawyer for advice on how to approach the negotiation. But essentially, your argument should be that keeping the dead equity on the cap table will make it impossible to raise future capital, and therefore it’s in everyone’s best interest if they lower their stake.

If you come into these negotiations with clear communications, and it doesn’t feel like you’re going around someone’s back, then you have the best chance at negotiating with the other party.

The reason you want to deal with this before you fundraise is it allows you to talk with VCs while having a clean cap table. Some VCs may look at a cap table that’s overrun with dead equity and it’ll turn them off from wanting to continue.

If your pre-fundraising negotiations don’t succeed, then you may be able to deal with it while negotiating a priced round, when you’ll have increased leverage.

Avoiding the dead equity problem in the first place

You may be wondering, “how can I avoid dead equity to begin with?”

A few thoughts come to mind:

  1. a high % of dead equity problems come from founders not realizing what the “market” is for giving out equity to employees, angels, advisors, incubators, etc. —and so you should research this information before you hand out large amounts of equity

  2. think carefully (and get advice from a startup lawyer) on how co-founder agreements are laid out (I wrote a LinkedIn post yesterday on a story where this became an issue). In particular, think through what happens if a co-founder leaves, and how to avoid that becoming a big issue for the startup moving forward

  3. talk to VC-backed founders who are a couple stages ahead of you and ask for their advice/stories. Similar to point #1, this will give you a sense of where the market currently stands, and what’s reasonable vs. unreasonable.

Follow these steps and you’ll set yourself up for a cleaner cap table — making your startup more appealing to VCs and giving you & your co-founders better control over what you’re building.

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I’ve helped 50+ founders run high-quality fundraises and raise over $190M. Check out jorianhoover.com to read founder testimonials and learn more about my approach.