The average level of CEO ownership at IPO/Exit

The founders of DAN Fund’s 9 portfolio companies own anywhere between 5% and 22% of the business.  We decided to take a look at the ownership levels of 47 tech companies (45 SaaS, 2 hardware) to determine the typical level of ownership of the founder/CEO at exit.  The data is below and at the following link. 

https://www.dropbox.com/s/z3515dopg4ndbt2/Article%20%20CEO%20Ownership%20at%20IPO.xlsx?dl=0

 

    Year of  
Company CEO S1 Ownership
Atlassian Scott Farquhar 2015 37.20%
Shopify Tobias Lutke 2015 14.62%
Instructure Joshua Coates 2015 12.40%
Xactly Chris Cabrera 2015 6.60%
Secureworks Michael Cote  2015 0.00%
GoPro Nicholas Woodman 2014 42.50%
Appfolio Brian Donahoo 2014 36.50%
New Relic, Inc. Lewis Cirne 2014 27.30%
MindBody Richard Stollmeyer 2014 11.20%
Fitbit James Park 2014 10.90%
Castlight Health Giovanni Colella 2014 8.10%
Five9, Inc.  Michael Burkland 2014 6.00%
MobileIron, Inc. Robert Tinker 2014 5.00%
Box Inc Aaron Levie 2014 4.10%
RingCentral, Inc. Vladimir Schmunis  2013 19.60%
Cvent, Inc.  Rajeev Aggarwal 2013 16.00%
Veeva Systems Inc. Peter Gassner 2013 13.50%
Benefitfocus, Inc. Shawn Jenkins 2013 13.36%
Textura Patrick Allin 2013 9.10%
Marin Software Christopher Lien 2013 8.80%
Zendesk Mikkel Svane 2013 7.10%
HortonWorks Robert Bearden 2013 6.80%
Hubspot Brian Halligan 2013 4.90%
2U Christopher Paucek  2013 2.50%
WorkDay David Duffield 2012 53.40%
Qualys, Inc. Philippe Courtot 2012 39.56%
Marketo Phillip Fernandez 2012 6.60%
Demandware Thomas Ebling 2012 4.10%
Lifelock Todd Davis 2012 3.70%
Cornerstone Adam Miller 2011 18.00%
BazaarVoice Brett Hurt 2011 14.30%
Splunk Godfrey Sullivan 2011 8.10%
Jive Software, Inc. Anthony Zingale 2011 7.56%
Proofpoint, Inc. Gary Steele 2011 6.87%
ServiceNow Frank Slootman 2011 5.58%
RealPage, Inc. Stephen Winn 2010 54.00%
LinkedIn Jeffrey Weiner 2010 4.10%
BroadSoft, Inc.  Michael Tessler 2010 3.70%
Intralinks J. Andrew Damico 2010 2.60%
Medidata Solutions Tarek Sherif 2009 8.90%
LogMeIN, Inc. Michael Simon 2009 7.95%
SPS Commerce, Inc. Archie Black 2009 3.10%
Athenahealth, Inc. Jonathan Bush 2007 5.30%
Netsuite Zachary Nelson 2006 3.60%
SalesForce Marc Benioff 2003 31.60%
LivePerson Inc. Robert Loscascio 2000 27.30%
Ultimate Softare Scott Scherr 1998 4.90%
       
Median   2013 8.10%
Average   2011 13.81%
Min   1998 0.00%
Max   2015 54.00%

 

As you can see from the 47 companies which IPO’d between 1998 and 2015 (median was 2011), the CEO’s owned on median 8.1% of the business and on average 13.81% of the business.   The range of ownership was wide, as the CEO of Secureworks owns 0% (granted, he wasn’t the founder) and the CEO of RealPage owns 54%. 

 

As the CEO of a Series A level business or late stage startup, keep in mind that a good board will grant you options along the way to make sure you’re not suffering too much dilution with each round.  So, if you’re at 8% to 13% ownership today, you’ll of course suffer dilution with each round, but less so than investors.  Even before the IPO, 33 of the 47 CEOs of the companies listed above received option grants with valued up to $7.8mm (CEO of Fitbit).

 

Of course, the best way to preserve your level of ownership as a CEO is to be as cash efficient as possible so you don’t suffer the dilution that comes with raising money.  The main source of dilution for a CEO is, by far, from raising capital so the sooner you can achieve cash break even, the sooner you can stop getting diluted.  

Blossom Street Ventures. All Rights Reserved.
Web Site Design by Idealgrowth