SaaS founders owned 14% at IPO
Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Connect on LinkedIn or email him directly at firstname.lastname@example.org, especially founders at all stages.
The founders of Jfrog owned 24% of the business at IPO. Viant’s founders owned 93% and Datto’s founder owned 15%. The range of founder ownership at exit/IPO can be quite wide and is dependent on a number of factors, the primary of which are the ability to command high valuations during fundraising and capital efficiency.
The list below shows founder ownership of the last 41 SaaS companies at IPO. The median level of founders ownership shown is 14% while the average is 23%. Note the ownership is combined for the corresponding founders shown.
A few things to consider:
Bootstrapping. Viant was built with no VC. As a result, the founders own 93% of the business. While it may take longer and be harder, I can promise you the founders of Viant don’t regret the ride.
Small ownership. The founder of Docusign, Thomas Gonser, owned 1.5% of the business when it went public. In instances like these, it’s impossible to tell whether he was diluted down to that figure or sold shares along the way to end up at a lower figure.
VC own 54% on median. Most founders should get used to the fact that if they raise significant capital from VC, then VC will come to own the majority of the company. However, that doesn’t mean they have control, as many of these companies have founders that own a class of stock which still controls voting.
Strategics don’t matter. Of the 41 companies listed, only 7 of them (17%) had a strategic investor. Strategic investors are not critical to any company’s success.
Midas touch. Some VC show up as backers a number of time. Sequoia and Accel were each in 6 of the IPOs shown. NEA, TPG, and August Capital were each in 3 IPOs. Tiger was in only 2 and Softbank was only in 1.