The amount of cash tech companies burn through to exit

What’s the level of investment needed to build a tech company that goes public?  The data and observations from 127 tech IPOs are below.




Software businesses needed $113mm of equity.  On median, publicly traded software companies raised through their Series D before going public, raising $113mm of equity to get there.  Note however that the 6 companies that IPO’d in 2018 raised on average $453mm and three of them went all the way to a Series F (Docusign, Smartsheets, Zuora, ZScaler, Dropbox, SurveyMonkey).  All 6 companies took on average 13 years to IPO.


Social Media raises the most.  Social media companies on median didn’t exit until after their Series F and raised on median $1.8bln of equity.   Linkedin was the baby of the group raising only $117mm of equity through the Series D before going public.  It’s interesting to see that social media companies made it to the promised land faster – on median they took 7 years since founding to IPO whereas software took 9 years.  Note Facebook and Snap took in $3.2bln and $2.7bln before going public.


Marketplaces went through $166mm.  Marketplaces raised on median $166mm of equity before going public.  They went through the Series E and exited 7 years after founding.  The most recent IPO’s in the sector, Eventbrite, Redfin, and Grubhub, raised $417mm, $655mm, and $500mm respectively.


Ad based revenue models needed $105mm.  They also took 7 years and went through the Series D.  Google and TrueCar were outliers raising $769mm and $304mm respectively.


Subscription models needed $125mm.  They did this through the Series C only and took 6 years.  Note Spotify went through $2.4bln pounds to go public.


Gaming and Ecommerce needed the least capital.  Relative to other tech peers, these companies raised far less equity prior to going public – $66mm and $78mm respectively.  The gaming sector raised only through the Series B while E-commerce went public after the Series C.  The sectors IPO’d only 5 to 6 years after founding.  Even newer ecommerce businesses like Blue Apron and Stitch Fix took only 4 and 6 years respectively, although note Blue Apron went through $200mm of equity and $94mm of debt to get there.


Hardware is a similar story.  Hardware companies raised only $75mm of equity on median, exited after 11 years, and did so after the Series D.  Roku and Sonos, the newest additions to the group, required 16 and 14 years to exit raising $239mm and $314mm, respectively.


The 127 companies combined raised $112mm of equity on median and $2mm of debt prior to going public.  It does appear that newly public companies stayed private much longer and raised far more capital than peers of prior years.


Visit us at