The list below shows founder or CEO ownership of 127 tech companies at IPO. The median level of ownership shown is 15% while the average is 20%.
Cash efficiency matters. 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 average founder ownership levels of 30% and 27% respectively, which is much higher than the median of the entire data set (15%).
Options & small investors make up ~30%. Both the median and averages of the founders and VC sum to ~70%. That means smaller investors and employees/consultants owned 30% 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.
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; or ii) the less common way is to be an incredibly hot startup in a frothy environment so you can raise money at elevated valuations. Depend on the former if you can because the latter can come and go with cycles.
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