An important question to everyone, I'm a developer with no experience in finance. I've written something which now exists as a prototype or POC so it's further along than just an idea. Recently I got an offer from someone to fund it to market by about $500,000. I think this amount of $$ makes them really an angel not a VC but I don't know.

They want to know what percentage of ownership I would give up for this level of funding. I have no idea what is fair. Could the people here tell me what they think a reasonable percentage trade of the company would be typical. Also any other advice. I will give some ground on this because if I don't get this funding it will make it very hard to get it to market. And they say 100% of nothing is nothing.

(I don't want to talk the specifics of what it does but there is nothing like it on the market and I have done the market research. The only competition around does it badly.)

I can't say anything about what is usual (or "fair", for whatever definition of that). But if you want to be in a good position for negitiations, it's better to make them say what percentage _they_ expect in return, and start from there. Asking you first is just a common negotiation tactic to get more than would be usual (especially if you're inexperienced with these things).

You kind of have to plan things differently: assume that there will be 3 or 4 rounds of investment before the company grows to an appreciable firm - Seed, A, and B, there is some equity, say 10-15% for early employees, etc.

Then you will conclude that giving away more than 20% at each stage will dilute you into nothingness

Ofcourse the nature of the project, etc. matter a lot

I think the standard is to evaluate in terms of valuation? So if you give up 10% for $500,000 you are setting a valuation of $5M, so 1% for $500,000 -> $50M valuation, etc.