The list below shows founder or CEO ownership of 160 tech companies at IPO. The median level of founder ownership shown is 14% 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 27% and 25% respectively, which is higher than the median of the entire data set.
Options, smaller investors, and others make up ~30%. Both the median and averages of the founders and VC sum to ~70%. That means smaller investors, employees, consultants and others owned 30% of these businesses at IPO.
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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