David Cummings on Startups

SaaS Founder/CEO Equity at Time of IPO

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David Cummings

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As a followup to the Rich or Royal conversation, there’s another example to highlight: SaaS founder equity at time of IPO. Here are the last nine SaaS IPOs profiled on this blog and the founder/CEO equity percentage at time of filing:

On average, the founder/CEO owned 10.9% of the business at time of IPO. Now, these are some of the most high profile SaaS startups over the past three years and by all measures these founder/CEOs have been tremendously successful. Entrepreneurs would do well to think through the Rich or Royal question and understand the level of dilution that comes from multiple rounds of institutional financing.

What else? What are some more thoughts on the average SaaS founder/CEO equity at time of IPO?

Comments

8 responses to “SaaS Founder/CEO Equity at Time of IPO”

  1. Douglas Hanna Avatar
    Douglas Hanna

    An important one that you left out is Atlassian, where the founders owned 75% (!) at the time of IPO filing. This is definitely more an exception than the rule, but definitely worth looking at.

    Reply
    1. David Cummings Avatar
      David Cummings

      Atlassian is an unbelievable company but not traditional SaaS (they’re a mix of installed software and SaaS). By having the installed software component they were able to finance the business with upfront license revenue (as opposed to SaaS where the revenue is spread out of the lifetime value of the customer).

      Reply
  2. Bob Avatar
    Bob

    Would be interesting to see Atlassian added to that list as well.

    Reply
  3. john Avatar
    john

    how about adding: exacttarget, eloqua, constant contact, veeva, and workday?

    Reply
    1. David Cummings Avatar
      David Cummings

      Those are great ones but a bit older (they were before 2013).

      Reply
      1. john Avatar
        john

        True, but could be interesting to see trends over time too (if there are enough datapoints)

  4. saschabenz Avatar
    saschabenz

    would be interesting to see the respective value of the stakes at the time of IPO..

    Reply
    1. Rob Avatar
      Rob

      Agreed. Part of the rationale for a founder to give up equity is to grow the overall size of the pie. 10% of $100M and 5% of $200M yield the same outcome. Time from founding to IPO would also be an interesting vector as the argument for aggressive funding is usually to dominate a market..

      Reply

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