Continuing with yesterday’s post on Founder Equity at Time of IPO, it’s also important to look at how much money each company raised to get to their S-1 filing for an IPO. As expected, the amount raised and the amount of equity the founders own are correlated, with higher amounts of money raised related to less ownership.
Here are some data points on total financing at time of IPO for these venture-backed startups:
- ExactTarget – $188M (source)
- Yelp – $56M (source)
- Bazaarvoice – $23.6M (source)
- Eloqua – $35.8M (source)
- Jive Software – $57M (source)
Another important element of founder ownership at time of IPO relative to venture funding is how far along the business was when it first raised money. Jive Software, as an example, was very far along before raising money, and thus the co-founders combined still have roughly 30% of the business. Bazaarvoice, which was extremely capital efficient only raising $23.6M, raised money at lower valuations and thus the founders took on greater dilution, resulting in less ownership than the Jive Software founders, even though they raised less than half the money.
Total amount of money raised as well as where in the startup lifecycle the money was raised are two major drivers of founder ownership in a business.
What else? What other thoughts do you have on total financing at time of venture-backed IPO?