Data about equity of 600 startups – comments (6)

Sixth post of comments on the 600 startup data. Today, it’s about the valuation of startups.

I had touched the topic on page 615 of the pdf. Here is the data again.

Be aware that these numbers are not typical of traditionnal companies. They show that startups going public are of a speculative nature, with a promise of very high-growth in the future. The multiples are very high and in the case of earnings, in fact most startups do not make a profit at IPO – about one out five!

Interestingly Silicon Valley does not have the highest multiples, but Europe is behing the USA.

The tables give the PS ratio (price to sales – ratio between valuation and sales) and PE ratio (price to earnings – ratio between valuation and profits) and the number of startups taken into account each time. The following curves show the PS values by 5-year periods and by year.

If you are lost, here are slides I have used in the past and if you want to get the excel file, send me an email.

Revolut Shareholding

A colleague of mine (thanks Agnès!) informed me that the United Kingdom made public its data about startups. This is just amazing!

So I checked about Revolut and found all the data I could dream of. Founders, rounds of funding, shareholders.

Two young founders from Eastern Europe origin, 29 and 30-year old at the time of founding.

Some big, somewhat strange, rounds and here is today’s cap table. However series E is a best guest whereas previous rounds were publicly availale.

Comments welcome!

This morning (April 13), I discovered an important inaccuracy, nothing wrong but still: what about the ESOP, the stock-options. They are mentioned in the company documents, so here is a modified cap. table, and see the difference! I must add this is the ESOP in Dec. 2018, so the number is probably bigger today.

Data about equity of 600 startups – comments (5)

Fifth post of comments on the 600 startup data. Today, it’s about the ownership of non-founding CEOs (compared to the founders).

I noticed a few months ago that in a majority of cases, the CEO was a founder. This was a surprise. The data confirms this: there are a total of 229 startups with a non-founding CEO out of 600 (38%). Again, fewer in the digital domain, and more in the health-related fields.

As you may see in my initial post, these CEOS have on average a 3% ownership (median value is 2.7%).

Is all this useful in practice? The median value of the ratio between the CEO & founders’s ownership is 0,5 (the average value is 1 because there are big outliers). Does this mean that if founders want to hire a CEO at foundation, he should have about 33% of the company, and at series A about 15% if you have read all my posts before!

Here is a more granular illustration.

The next image shows the founders’ ownership on the horizontal axis vs. the CEO’s on the vertical axis (with a zoom on the right).

A final illustration as food for thought, the founders’ ownership in the digital and health-related fields, relatively to the presence of a non-founding CEO or not. (Note that the vertical axis does not have the same scale for the two domains).

Data about equity of 600 startups – comments (4)

Fourth post of comments on the 600 startup data. Today, it’s about how equity is shared following my post yesterday which focused on founders’ equity.

A quick extract from the data gives the following average and median values:

So as a simple model, it is 10% for (2-3) founders, 20% for employees, 50% for private investors (VCs and BAs – business angels) and about 20% for public investors at IPO.

In addition the 20% for employees are made of 8% of common shares, 7% of granted options and 5% of available options.

Finally non-founding CEOs have 3%, VPs 0.8% and CFOs 0.6%.

Independant board members have as a group 0.4%, they are in general 2 to 3, so it is about 0.2% per director.

If you want to dig in the topic, you may be interested in the following slides:

Data about equity of 600 startups – comments (3)

Third post of comments on the 600 startup data. As I am not sure how many posts I will write about this, I created a tag #600startups.

I looked at the founders’ age yesterday; today it is about their ownership over time. Founders keep 12.5% of the company at IPO, a little more in IT (about 16%), less in health (7-8%). The median value is 8.5%.

The series A curve is misleading! Founders’ ownership is at IPO but the Series A ownership is at the time of the round itself, not at the time of the IPO…

Moreover, I built a simple model which is the following: the Series A ownerhsip is based on the ratio between their shares and the sum of these shares and the founders shares increased by 20% (this to take into account future hires): as a short illustration, if Series A took 40% in the first round, founders had 50% as 10% was reserved for future hires (i. e. 20% of the founders’ stake).

It’s also worth noticing the series A are pretty big, about $9M on average (median value is $4.5M), and possibly in several tranches (as it is quite common in biotech).

Data about equity of 600 startups – comments (2)

Second post of comments on (updated) data on 600 (former) startups, about (what I think) are interesting or intriguing results.

After venture capital in the first post, here are elements about founders.

The 600 startups gave me data about 1016 founders, al though there is an average of 2.3 founders per startup. I did not have the age of all of them, neither their role or ownership. The average age is 37.9, the median is 36. (This is age at foundation, I added this after a comment I received on April 9, 2020).

The following figures show some striking results about the age related to fields: founders are much older in the health-related fields, much younger in digital technnologies. It is more than 45 in biotech and 43 in medtech in comparison to 33 in software and Internet.

Data about equity of 600 startups – comments (1)

As a follow-up to my recent post on (updated) data on 600 (former) startups, here is a first post about (what I think) are interesting or intriguing results.

Without doing too much self-promotion, let me add that I have in the past already dealt with the topic as I mentionin the document or through the following illustration:

My first comment is that the differences linked to fields or geographies are not that big, whereas data evolved more over time (fifty years). Amounts of venture capital, years to IPO, sales, profits, employees are not that different for example except in biotech maybe, for sales and employees at least.

One important note: in my list of 600 companies, only 15 did not have venture capital (or at least private investors). Is there a bias here? I am not sure, but I could be wrong.

These “comment” posts will be short and I finish this one with a look at Series A, the 1st investment round. The amounts are substantial, $8M on average. I did a new analysis, i.e. to find out how much VCs take at this stage and on average, it’s … 47%. A little less in IT, a little more in healthcare, a little less in Silicon Valley, a little more in Boston.

If I bring it back to the percentage per million, that gives 22%, I let you think about this astonishing result … but we must also look at the median values, because all this is not gaussian as I have often say, but follows a power law. Median values are $4.5M for Series A in exchange for 45.5% and 10% for $M.

Updated data in equity of 600 (former) startups

The Covid19 virus has an indirect effect, we have more time at home and in front of computers. So I updated my data in startup equity from 600 companies for which information was available, mostly because they had filed to go public. Here is the full list of individual data.

If you cannot visualize the document on scribd, here is a direct link to the pdf entitled Equity_in_600_Startups-Lebret-April2020.

At the end of this 600+-page document, you’ll find some statistics, here they are again. I will probably come back to some results I find interesting not to say intriguing. Enjoy an react!

Some addtional comments in later posts:
1- About venture capital: on April 7 comments 1.
2- About the age of founders: on April 8 comments 2.
3- About the equity of founders: on April 9 comments 3.
4- How is equity shares: on April 10, comments 4.
5- About the equity of non-founding CEOS: on April 11, comments 5.
6- About valuation of startups: on April 12, comments 6.
7- What have they become: on April 16, comments 7.

Basic data about startups (funding, sales, profits, employees at IPO and years to IPO) by fields, geographies and periods of time.

Data about founders (age, ownership and nb. by startups) and other stakeholders by fields, geographies and periods of time.

Data about ownership of non-founding CEOs, VPs, CXOs, board members by fields, geographies and periods of time.

New data about ownership of series A investors by fields, geographies and periods of time.

Venture Capital, Nasdaq and Crises

When I published the book which is the “raison d’être” of this blog, I had shortly analyzed the correlations between venture capital level in the USA, the Nasdaq index and their relationship to “crises”. Each peak and bottom level could be easily explained. I updated it to today levels with idea of revisiting when we zill be out of the Covid19 crisis. Comments welcome!

Whats’s a startup? (part 4)

I used today again Steve Blank’s marvellous definition of a startup that I had used last time in 2013 here.

You can listen to him giving it in Helsinki in 2011 at Aalto University

or through his Mooc here:

It’s obvious once you heard it and took so many years to be designed!

In these uncertain times of Coronavirus, I can only advise you to relax. One way for me was tonight through Recomposed by Max Richter – Vivaldi’s Four Seasons.