The Median Level of Founder Ownership at Exit

Founders are always concerned with their level of equity ownership and the potential dilution from a new round, and rightly so.  The name of the game is to have a large exit while preserving as much equity for yourself as possible.  To better understand what the typical level of founder and VC ownership is upon exit, we poured through the S1 filings of 79 publicly traded tech companies.  An S1 is a prospectus required by the SEC before an IPO, so it’s full of very interesting data.  The technology companies spanned various industries such as SaaS, content distributors, and social media, including companies like Apple, Facebook, Google, and Salesforce.  The data and key observations are below. 

 

    Founder VC  
Company Major Founders/CEO Ownership Ownership VC's
Social        
Facebook Mark Zuckerburg 57% 17% Accel Partners, DST Global Limited
Linkedin Reid Hoffman 21% 40% Sequoia Capital, Greylock partners, Bessemer Venture partners
Twitter Dick Costolo 2% 25% Rizvi Traverse, Spark capital, Benchmarkcapital partners VI, Union square partners, DST global
         
         
Marketplaces        
Priceline Jay Walker 47% 74% General Atlantic partners, vulcan ventures, walker digital corp
eBay Pierre Omidyar 42% 22% Benchmark
Sabre Tom Klein 1% 79% TPG, Silver Lake funds, Soverign Co-Onvest
TripAdvisor Barry Diller 30% --- Created from a spin off - no s1 filed
Shutterstock Jonathan Oringer 55% 18% Insight venture partners
Etsy James Breyer 25% 66% Accel partners, Index Ventures, Tiger Global Management, Union square ventures, Action Capital
Lending Club Renaud laplanche 5% 57% norwest venture partners, canaan VII LP, Foudation capital vi, morgenthaler venture partners ix
Angie's List William Oesterle 6% 63% tri investments, battery ventures VIII, T Rowe Price Associates, BV capital, Capital research global investors
Zillow Rascoff, Barton, Frink 35% 60% Benchmark capital, tcv funds, par investment partners
Groupon Andrew mason 8% 59% Green media, Rugger Ventures LLC, New enterprise assocciates, Accel Growth Fund,City deal management
GrubHub Matthew Maloney 3% 53% Spectrum Equity, Warburg pincus private equity, gs capital partners, thomas h lee partners, benchmark capital partners, origin ventures
Care.com Sheila Marcelo 7% 69% Matrix partners, trinity ventures, new enterprise assocaites, institutional venture partners, USAA
         
         
Content Distributors        
Google Sergey Brin, Larry Page 51% 20% KPCB Holdings, Sequoia capital
Yelp Jeremy Stoppelman 11% 86% Bessemer Venture partners, Elevation partners, benchmark capital partners, max levchin, jeremy stoppelman
TrueCar Scott Painter 12% 82% United services automobile assocation, capricorn investment group, upfront ventures, anthem ventures, vulcan capital growth equity, peppy capital partners
Netflix Jay Hoag 43% 68% Institutional venture management, technology grossover management, foundation capital management
Pandora Joseph Kennedy 3% 75% crosslink capital, walden venture capital, greylock partners, labrador ventures V-B, Hearst Corp, GGV Capital
         
         
Gaming        
Take-Two Interactive Peter Brant 16% 6% BMG Entertainment
Zynga Mark Pincus 16% 41% KPCB Holdings, institutional venture partners, union square ventures, foundry venture vapital, avalon ventures, dst global limited
         
Hardware        
Fitbit James Park 11% 57% Foundry Group, True Ventures, Softbank
GoPro Nicholas Woodman 43% 34% Riverwood Capital, Foxteq, Sageview
TiVo Corporation Michael Ramsay 10% 54% Venture Partners, Assoc., Direct TV, Vulcan Vent., Philips Vent., 
Garmin Ltd Min Kao, Gary Burrell 45% 2% Gender Industrial Corp. 
Apple Inc. Steve Jobs, Markula, Scott 35% 9% Broventure Company, Continental Illinois, Fifty-Third Street, First Century, Hellman, Hixon, Xerox
         
SaaS        
Box Inc Aaron Levie 4% 65% DFJ, US Venture Partners, General Atlantic, Scale, Bessemer, Meritech
Hubspot Brian Halligan 5% 66% General Catalyst, Matrix, Scale, Sequoia, Charles River
Marketo Phillip Fernandez 7% 86% InterWest, Storm, Mayfield, IVP, Battery
Netsuite Zachary Nelson 4% 79% Larry Ellison (Oracle), Starvest
SalesForce Marc Benioff 32% 16% Halsey Minor (CNET), Attractor Funds
Wix.com Avishai Abrahami 5% 78% Mangrove, Bessemer, Insight, Benchmark
WorkDay David Duffield 53% 21% Greylock, NEA
Zendesk Mikkel Svane 7% 52% Charles River, Benchmark, Matrix
Atlassian Scott Farquhar 37% 13% Accel
Shopify Tobias Lutke 15% 42% Bessemer, FirstMark, Klister, Omers, 
Xactly Chris Cabrera 7% 67% Rembrandt, Bay Partners, Alloy, Key, BridgeScale, Outlook
MindBody Richard Stollmeyer 11% 65% Bessemer, Catalyst, IVP, W Capital, JP Morgan
Appfolio Brian Donahoo 37% 48% IGSB, BV Capital
Splunk Godfrey Sullivan 8% 72% August, Sevin Rosen, JK&B, Ignition
ServiceNow Frank Slootman 6% 78% JMI, Sequoia, Greylock
BazaarVoice Brett Hurt 14% 53% Austin Ventures, Battery
HortonWorks Robert Bearden 7% 62% Benchmark, Yahoo, Index, Teradata, HP
2U Christopher Paucek  3% 69% Redpoint, John Katzman, Highland Capital, Novak Biddle, Bessemer
Acacia Murugesan Shanmugaraj 4% 68% Matrix Partners, Commonwealth Capital, Summit Partners
Athenahealth, Inc. Jonathan Bush 5% 65% Oak Investment, (Draper, Fisher Jurvetson, Venrock Associates, Cardinal Partners, PSS  World Medical
Benefitfocus, Inc. Shawn Jenkins 13% 77% Goldman Sachs Group, Oak Investment
BroadSoft, Inc.  Michael Tessler 4% 63% Bessemer, Grotech, Charles River, Columbia Broadsoft, RRE Venture
Castlight Health Giovanni Colella 8% 56% Venrock, Oak Investment, Maverick Capital, Fidelity Investment, Wellcome Trust
Cornerstone Adam Miller 18% 51% Bessemer, Meritech Capital, Bay Partners
Cvent, Inc.  Rajeev Aggarwal 16% 48% Insight, New Enterprise
Demandware Thomas Ebling 4% 64% Norht Bridge, General Catalyst
Five9, Inc.  Michael Burkland 6% 85% Hummer Windblad, Adams Street, Partech International, Mosiac Venture, SAP Venture
Instructure Joshua Coates 12% 67% OpenView, Epic, Bessemer, Insight
Intralinks J. Andrew Damico 3% 88% TA Associates, Rho Capital
Jive Software, Inc. Anthony Zingale 8% 73% Sequoia Capital, Kleiner Perkins, David J Hersh, Matthew Tucker
Lifelock Todd Davis 4% 65% Bessemer, Kleiner Perkins, Goldman Sachs, Symantec Corp., Industry Venture
LivePerson Inc. Robert Loscascio 27% 63% TRI Investments, Battery Ventures, BV Capital, T. Rowe Price
LogMeIN, Inc. Michael Simon 8% 70% Prism Ventures, Polaris Venture, TechnologogieHolding Central and Easterun European Funds, Integral Capital
Marin Software Christopher Lien 9% 56% benchmark Capital, DAG Ventures, Temasek Capital, Crosslink Ventures
Match Group Sam Yagan 0% 100% InterActiveCorp
Medidata Solutions Tarek Sherif 9% 48% Insight Venture, Milestone, Stonehenge Capital
MobileIron, Inc. Robert Tinker 5% 65% Stom Ventures, Norwest Venture, Sequoia Capital, Foundation Capital
New Relic, Inc. Lewis Cirne 27% 46% Benchmark, Insight Venture, Tenaya Capital, Trinity Venture
Proofpoint, Inc. Gary Steele 7% 66% MDV VII, Meritech Capital Partners, DAG Ventures GP Fund, RRE Ventures Fund
Qualys, Inc. Philippe Courtot 40% 38% Trident Capital, GRP Partners
RealPage, Inc. Stephen Winn 54% 33% Advance Capital partners, Apax Excelsior
RingCentral, Inc. Vladimir Schmunis  20% 70% Sequoia Capital, Vladimir Shmunis, Khosla Ventures, DAG Ventures
Secureworks Michael Cote  0% 100% Michael S. Dell, Denali Holding Inc., Dell Marketing
SPS Commerce, Inc. Archie Black 3% NA BVCF IV, CID Capital, River City Capital Funds, Split Rock Partners
Textura Patrick Allin 9% 48% Northwater Capital, First Midwest Bancorp,  H Patrick Hackett, Aon Risk Services Companies
Twilio Jeff Lawson 12% 48% Bessemer Venture, Fidelity, Union Square 
Ultimate Softare Scott Scherr 5% 72% Welsh Carson Anderson & Stowe, WCAS Capital Partners, WCAS Mangagement, Ernest Group
Veeva Systems Inc. Peter Gassner 14% 43% Emergence Capital, Craig Ramsey, Maja Ramsey
         
Payments        
Square Jack Dorsey 24% 34% Khosla Ventures, JPMC Strategic, Sequoia Capital, Rizvi Traverse
         
E-Commerce        
Amazon Jeffrey Bezos 47% 16% John Doerr
Alibaba Jack Yun, Joseph C. 13% 57% SoftBank, Yahoo
Overstock.com, Inc. Patrick M. Byrne  45% 64% High Plains Investments, Dorothy Byrne, Amazon
         
         
Median   11% 62%  
Average   17% 56%  
         
*In some cases, Founder + VC ownership is more than 100% because the founder may also be invested via a separate entity and marked "VC"

 

-Upon exit, the median level of founder ownership across the 79 companies was 11%.  The average was slightly higher at 17%, due to the very heavy ownership stakes of guys like Nick Woodman at GoPro (43%), Jay Hoag at Netflix (43%), Pierre Omidyar at eBay (42%), and Sergey Brin & Larry Page at Google (51% combined).  While you want to own massive stakes like the guys above, so long as you’re at least at 11% upon exit, you’re in line with your peers. 

 

-The median level of VC ownership upon exit was 62% and the average was 56%.  In other words, to get to the IPO level, generally it takes a significant amount of outside investment so nurturing and maintaining large investor relationships is important. 

 

-Both the median and averages of the founders and VC sum to 73% (11+62 and 17+56).  That means smaller investors and employees owned 27% of these businesses at IPO.  The lesson there is that small investors will be as important to your success as large investors, especially early on.  Additionally, option pools are going to need to be set up along the way and sharing equity with your key employees will be critical to growing a large, IPO-worthy business. 

 

-A number of VC pop up repeatedly in different deals. For instance, Bessemer, Sequoia, Benchmark, Greylock, DST, and Accel are each in multiple deals.  There is a reason firms like these can raise billions of dollars, and it’s because of the success of the entrepreneurs they invest in. 

 

Hopefully the data is helpful to you in framing founder ownership.  Raising money is very dilutive, so preserve your equity by staying as cash efficient as possible and finding creative ways to grow.   

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