How much will you own prior to IPO/Exit? Probably 11%

Snapchat cofounders Evan Spiegel and Robert Murphy owned a combined 37% of Snapchat before it went public.  That’s a remarkable level of ownership given the amount of capital they raised, and it made us wonder: what’s been the average and median level of ownership of the founders of a company prior to their exit/IPO? To figure that out, we looked into 92 tech companies IPOs and pulled the level of ownership of major founders as well as VC’s.  The data showed that on median, founders owned 11% of the business prior to exit whereas VC owned 56%.  Using averages, the numbers were 19% for founders and 55% for VC.  Below is the data along with a few more observations. 

    Founder VC    
Company (IPO Date) Major Founder/CEO Ownership Ownership   VC's
Social          
Facebook (2012) Mark Zuckerburg 21% 15%   Accel Partners, DST Global Limited, Goldman Sachs, T Rowe Price
Linkedin (2011) Reid Hoffman 21% 40%   Sequoia Capital, Greylock partners, Bessemer Venture partners
Twitter (2013) Jack Dorsey 5% 53%   Rizvi Traverse, Spark capital, Benchmarkcapital partners VI, Union square partners, DST global
Snapchat (2017) Evan Spiegel, Robert Murphy 37% 18%   Benchmark VII, Lightspeed Venture Partners IX
Line Corp (2016) Takeshi Idezawa 0% 100%   Naver
           
Average   17% 45%    
Median   21% 40%    
           
Marketplaces          
Priceline (1999) Jay Walker 47% 74%   General Atlantic partners, vulcan ventures, walker digital corp 
eBay (1998) Pierre Omidyar 42% 24%   Benchmark
Sabre (2014) Tom Klein 1% 97%   TPG, Silver Lake funds, Soverign Co-Onvest
Shutterstock (2012) Jonathan Oringer 65% 24%   Insight venture partners
Etsy (2015) James Breyer 30% 62%   Accel partners, Index Ventures, Tiger Global Management, Union square ventures
Lending Club (2014) Renaud laplanche 6% 54%   norwest venture partners, canaan VII LP, Foudation capital vi, morgenthaler venture partners ix
Angie's List (2011) William Oesterle 8% 63%   tri investments, battery ventures VIII, T Rowe Price Associates, BV capital, Capital research global investors
Zillow (2011) Richard Barton, Llyod D. Frink 88% 8%   Benchmark capital, tcv funds, par investment partners
Groupon (2011) Andrew mason 8% 48%   Green media, Rugger Ventures LLC, New enterprise assocciates, Accel Growth Fund
GrubHub (2014) Matthew Maloney, Mike Evans 6% 53%   Spectrum Equity, Warburg pincus private equity, gs capital partners, thomas h lee partners, benchmark capital partners, origin ventures
Care.com (2014) Sheila Marcelo, David Krupinski 8% 69%   Matrix partners, trinity ventures, new enterprise assocaites, institutional venture partners, USAA
Match Group (2015) Sam Yagan 0% 100%   InterActiveCorp
Expedia (2005, 2nd IPO) Richard Barton 0% 100%   Microsoft
Trivago (2016) Rolf Schromgens --- ---   Expedia
           
Average   24% 60%    
Median   8% 62%    
           
Content Distributors          
Yelp (2012) Jeremy Stoppelman 11% 61%   Bessemer Venture partners, Elevation partners, benchmark capital partners
TrueCar (2014) Scott Painter 12% 82%   USAA, Capricorn Investment Group, Upfront Ventures, Anthem Ventures, Vulcan Capital, Peppy Capital
Netflix (2002) Reed Hasting, Marc Randolph 26% 82%   Technology Crossover Ventures, Institutional Venture Managemnet, Finanzas, Technology Crossover Management II, Foundation Capital Management Co. II
Pandora (2011) Tim Westergren, Jon Kraft, Will Glaser 2% 75%   crosslink capital, walden venture capital, greylock partners, labrador ventures V-B, Hearst Corp, GGV Capital
Yahoo (1996) Jerry Yang 14% 51%   Softbank, Sequoia
Google (2004) Sergey Brin, Larry Page 31% 19%   KPCB Holdings, Sequoia capital
           
Average   16% 62%    
Median   13% 68%    
           
Gaming          
Take-Two Interactive (1997) Ryan Brant 42% 47%   Bridgehampton Investors, L.P., Anglo American Security Fund, L.P.
Zynga (2011) Mark Pincus 19% 40%   KPCB Holdings, institutional venture partners, union square ventures, foundry venture vapital, avalon ventures, dst global limited
Activision (1993) Robert Kotick 9% 10%   Steve Wynn
           
Average   23% 32%    
Median   19% 40%    
           
Hardware          
Fitbit (2015) James Park 11% 57%   Foundry Group, True Ventures, Softbank
GoPro (2014) Nicholas Woodman 49% 33%   Riverwood Capital, Foxteq, Sageview
TiVo Corporation (1999) Michael Ramsay 10% 54%   Venture Partners, New Enterprise Assoc., Direct TV, Vulcan Vent., Philips Vent., 
Garmin Ltd (2000) Min Kao, Gary Burrell 45% 2%   Gender Industrial Corp. 
Apple Inc. (1980) Steve Jobs, Markula, Wozniak 37% 8%   Broventure Company, Continental Illinois, Fifty-Third Street, First Century, Hellman, Hixon, Xerox
           
Average   30% 31%    
Median   37% 33%    
           
SaaS          
Box Inc (2015) Aaron Levie 4% 65%   DFJ, US Venture Partners, General Atlantic, Scale, Bessemer, Meritech
Hubspot (2014) Brian Halligan 5% 66%   General Catalyst, Matrix, Scale, Sequoia, Charles River
Marketo (2013) Phillip Fernandez 7% 86%   InterWest, Storm, Mayfield, IVP, Battery
Netsuite (2007) Zachary Nelson 4% 79%   Larry Ellison (Oracle), Starvest
SalesForce (2004) Marc Benioff 32% 16%   Halsey Minor (CNET), Attractor Funds
Wix.com (2013) Avishai Abrahami 5% 78%   Mangrove, Bessemer, Insight, Benchmark
WorkDay (2012) David Duffield 53% 21%   Greylock, NEA
Zendesk (2014) Mikkel Svane 7% 59%   Charles River, Benchmark, Matrix, Alexander Aghassipour
Atlassian (2015) Scott Farquhar 38% 13%   Accel
Shopify (2015) Tobias Lutke 15% 73%   Bessemer, FirstMark, Klister, Omers, Georgian Partners, Bruce McKean, James Lake, 
Xactly (2015) Chris Cabrera 7% 67%   Rembrandt, Bay Partners, Alloy, Key, BridgeScale, Outlook
MindBody (2015) Richard Stollmeyer 11% 65%   Bessemer, Catalyst, IVP, W Capital, JP Morgan
Appfolio (2015) Brian Donahoo 5% 48%   IGSB, BV Capital
Splunk (2012) Godfrey Sullivan 8% 83%   August, Sevin Rosen, JK&B, Ignition, Erik M. Swan, Michael J. Baum
ServiceNow (2012) Frank Slootman 6% 78%   JMI, Sequoia, Greylock
BazaarVoice (2012) Brett Hurt 14% 63%   Austin Ventures, Battery, Eastern Advisors
HortonWorks (2014) Robert Bearden 7% 62%   Benchmark, Yahoo, Index, Teradata, HP
2U (2014) John Katzman 15% 54%   Redpoint, Highland Capital, Novak Biddle, Bessemer
Acacia (2016) Murugesan Shanmugaraj 4% 68%   Matrix Partners, Commonwealth Capital, Summit Partners
Athenahealth, Inc. (2007) Jonathan Bush/Todd Park 11% 53%   Oak Investment, Draper Fisher Jurvetson, Venrock Associates, Cardinal Partners, PSS  World Medical
Benefitfocus, Inc. (2013) Shawn Jenkins 13% 77%   Goldman Sachs Group, Oak Investment
BroadSoft, Inc. (2010) Michael Tessler 5% 64%   Bessemer, Grotech, Charles River, Columbia Broadsoft, RRE Venture
Castlight Health (2014) Giovanni Colella 8% 65%   Venrock, Oak Investment, Maverick Capital, Fidelity Investment, Wellcome Trust
Cornerstone (2011) Adam Miller 18% 49%   Bessemer, Meritech Capital, Bay Partners
Cvent, Inc. (2013) Rajeev Aggarwal 16% 48%   Insight, New Enterprise
Demandware (2012) Thomas Ebling 4% 64%   North Bridge, General Catalyst
Five9, Inc. (2014) Michael Burkland 6% 85%   Hummer Windblad, Adams Street, Partech International, Mosiac Venture, SAP Venture
Instructure (2015) Joshua Coates 12% 67%   OpenView, Epic, Bessemer, Insight
Intralinks (2010) J. Andrew Damico 3% 88%   TA Associates, Rho Capital
Jive Software, Inc. (2011) Anthony Zingale 8% 73%   Sequoia Capital, Kleiner Perkins, David J Hersh, Matthew Tucker
Lifelock (2012) Todd Davis 4% 65%   Bessemer, Kleiner Perkins, Goldman Sachs, Symantec Corp., Industry Venture
LivePerson Inc. (2000) Robert Loscascio 27% 56%   Highland Capital Partners, Dell, FGII, Dawntreader, Allen & Company, NBC Interactive Media
LogMeIN, Inc. (2009) Michael Simon 8% 75%   Prism Ventures, Polaris Venture, TechnologogieHolding Central and Easterun European Funds, Integral Capital, Intel Capital
Marin Software (2013) Christopher Lien 9% 56%   Benchmark Capital, DAG Ventures, Temasek Capital, Focus Ventures, Crosslink Ventures
Medidata Solutions (2009) Tarek Sherif 9% 48%   Insight Venture, Milestone, Stonehenge Capital
MobileIron, Inc. (2014) Robert Tinker 5% 65%   Stom Ventures, Norwest Venture, Sequoia Capital, Foundation Capital
Nant Health (2013) Patrick Soon Shiong 57% ---   ---
New Relic, Inc. (2014) Lewis Cirne 27% 46%   Benchmark, Insight Venture, Tenaya Capital, Trinity Venture
Proofpoint, Inc. (2012) Gary Steele 7% 66%   MDV VII, Benchmark Capital Partners, Meritech Capital Partners, DAG Ventures GP Fund, RRE Ventures Fund
Qualys, Inc. (2012) Philippe Courtot 40% 38%   Trident Capital, GRP Partners
RealPage, Inc (2010) Stephen Winn 54% 33%   Advance Capital partners, Apax Excelsior
RingCentral, Inc. (2013) Vladimir Schmunis  20% 51%   Sequoia Capital, Khosla Ventures, Vlad Vendrow, DAG Ventures
Secureworks (2016) Michael Cote  0% 100%   Michael S. Dell, Denali Holding Inc., Dell Marketing
SPS Commerce, Inc. (2010) Archie Black 3% 48%   BVCF IV, CID Capital, River City Capital Funds, Split Rock Partners
Textura (2013) Patrick Allin 9% 48%   Northwater Capital, First Midwest Bancorp,  H Patrick Hackett, Aon Risk Services Companies
Twilio (2016) Jeff Lawson 12% 48%   Bessemer Venture, Fidelity, Union Square 
Ultimate Software (1998) Ofer Nemirovsky 12% 20%   HarbourVest Partners V, JP Morgan (according to SEC S-1/A, 05-29-1998)
Veeva Systems Inc. (2013) Peter Gassner 14% 43%   Emergence Capital, Craig Ramsey, Maja Ramsey
           
Average   14% 59%    
Median   8% 64%    
           
Payments          
Square (2015) Jack Dorsey 24% 34%   Khosla Ventures, JPMC Strategic, Sequoia Capital, Rizvi Traverse
           
E-Commerce          
Amazon (1997) Jeffrey Bezos 47% 16%   John Doerr
Alibaba (2014) Jack Yun, Joseph C. 13% 57%   SoftBank, Yahoo
Overstock.com, Inc. (2002) Patrick M. Byrne  45% 64%   High Plains Investments, Dorothy M. Byrne, Amazon.com
Shutterfly (2006) Jeffrey T. Housenbold 7% 72%   James H. Clark, Mohr Davidow Ventures, Sutter Hill Ventires
Wayfair, Inc. (2014) Niraj Shah/Steven Conine 58% 25%   Battery Ventures, Great Hill Partners, and HarbourVest Partners
Blue Nile, Inc. (2004) Mark Vadon 11% 65%   Bessemer Ventures, KPCB Holdings, Trinity Ventures, Lightspeed Venture Partners, Vulcan Ventures
PetMed Express, Inc. (2000) Menderes Akdag 6% 50%   Tricon Holdings, LLC, International Consultants, LLC
U.S. Auto Parts Network (2007) Sol Khazani, Mehran Nia 51% 30%   Oak Investment Partners XI
HSN, Inc. (2008) Thomas J. McInerney 0% 49%   Clearbridge Advisors, Lord Abbett & Co, Liberty Media Corportation
LightInTheBox (2013) Ye Yuan/Bo Feng 53% 99%   Ceyuan Entities,GSR Ventures III, L.P., Wincore Holdings Limited,Vitz Holdings Limited, Clinet Investments Limited, Trustbridge Partners III, L.P., Focus China Holdings Limited, Fulltrend Holdings Group Limited
           
Average    29% 53%    
Median   29% 54%    
           
Total Median   11% 56%    
Total Average   19% 55%    
           
*In some cases, Founder + VC ownership is more than 100% because the founder may also be invested via a separate entity and marked "VC"

 

 

 

-Businesses that tend to be less cash needy have higher levels of ownership for the founders.  For instance, ecommerce and hardware, both of which are sectors which tend to generate cash, had median founder ownership levels of 30% and 29% respectively, which is much higher than the median of the entire data set. 

 

-Certain VC showed up on the list repeatedly.  Frequent appearances were made by Benchmark, Sequoia, Greylock, Bessemer, and Khosla, among others.  Indeed if you can raise capital from the names on this list, you’ll have someone in your corner that has shepherded companies to the promised land before.  Arguably the odds of success (defined as going public/exiting) increase. 

 

There are two ways to maximize founder equity at exit: i) the right way is to be cash efficient and raise as little money as possible to grow the business; ii) the lucky way is to be an incredibly hot startup in an incredibly frothy environment <cough, Snapchat, cough>.  Depend on the former if you can, because the latter will come and go with cycles. 

 

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