André de Almeida Santos shared his expertise on dilutive funding with HiTech participants, offering practical strategies to help deep tech founders raise capital and approach venture capital investors.

On May 20, 2025, HiTech hosted the second session of its "Funding Opportunities" webinar series, this time focusing on the complex world of dilutive financing for deep tech founders. Led by André de Almeida Santos, partner at Indico Capital Partners, the session explored how early-stage founders can fund their ventures while maintaining long-term control and strategic flexibility.

Why Dilution Matters - Especially in Deep Tech

Deep tech startups face unique pressures: long R&D cycles, significant upfront costs, and often delayed commercial traction. As André highlighted, dilution is permanent — and poor fundraising decisions in the early stages can undermine ownership and limit a team’s ability to attract future investment.

The session broke down the most common financing instruments used in early-stage rounds:

• Equity Rounds: Clean and committed, but legally complex and often premature for pre-seed stages.
• Convertible Notes: Flexible and popular with angels; deferred valuation but may lead to confusion if not carefully managed.
• SAFEs (Simple Agreements for Future Equity): Simple and founder-friendly; however, uncapped SAFEs can dangerously accumulate and create major dilution later on.

Recommendation for TRL 4–5 founders: Use convertible notes or capped SAFEs to raise just enough to reach key technical milestones — and model the dilution impact from the beginning.

André warned that without careful planning, founders can fall below 50% ownership even before reaching Series A. A disciplined fundraising approach — such as a $1M SAFE at an $8M post-money valuation, followed by structured equity rounds — helps preserve control. In contrast, the overuse of uncapped SAFEs and oversized ESOPs (Employee Stock Ownership Plans) can dilute founders below 30%, destabilizing teams and turning away investors.

One of the key messages from the session was the importance of planning your cap table early. Founders should aim to keep ownership above 50% post-seed, reserve equity for an ESOP, and leave space for strategic partners and future investors. Equity is your most expensive currency — it should be used with long-term vision.

André also stressed that fundraising should be aligned with technical progress. Rather than raising large sums too early, deep tech startups should tie their capital needs to Technology Readiness Levels (TRLs):

• TRL 4–5: Secure IP and demonstrate technical feasibility. Raise just enough for proof of concept.
• TRL 6–7: Create working prototypes and pilot demonstrations. Fund the path to validation.
• TRL 8–9: Achieve revenue and commercial scale. Raise for market expansion.
  

Match fundraising to proof points. Raise just enough to reach the next milestone credibly.

A smart capital strategy doesn’t rely on equity alone. Founders are encouraged to blend in non-dilutive sources of funding, such as public grants (PT2030, European Innovation Council), corporate partnerships and pilots, or university resources in the case of spinouts. These options help extend runway without touching the cap table.

Fundraising isn’t just about getting to the next round — it’s about building with purpose. Each investment should meaningfully advance the business, not just keep it afloat.

Understanding the terms of your investment — from valuation caps to pro-rata rights and board structure — is just as important as the amount raised. Your cap table tells your company’s story. The earlier you take control of that narrative, the better positioned you’ll be as your venture grows.

At Indico Capital partners, they are looking for great teams, large impact, innovative defensible tech and a solid business plan. Know more about their work at https://www.indicocapital.com.

About André de Almeida Santos:
André de Almeida Santos is a partner at Indico Capital Partners, where he focuses on impact-driven venture capital with a particular emphasis on deep tech and the Blue Economy. With over 20 years of international experience across the private sector, development finance, and public policy, he has led investment strategies that promote inclusive growth, environmental sustainability, and responsible innovation. André is also an active mentor and investor in early-stage startups, drawing on his expertise in ESG, blended finance, and adaptive leadership to support founders building solutions for a more equitable and sustainable future.

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