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# analysing 5000 startup cap tables

analysing 5000 startup cap tables

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### analysing 5000 startup cap tables

1. 1. 2016 Private Company Equity Statistics Report
2. 2. ABOUT THIS REPORT • Capshare offers a cloud-based cap table and electronic stock management system • This report offers benchmark data and aggregated analysis for startup executives and investors • No personal or company-identiﬁable data is available in this report • Capshare has over 5,000 active companies, law ﬁrms, and investors using our platform
3. 3. Common + Convertibles 25% 50% 75% 0% Common Only 100% Series Seed Series B Series CSeries A Series D+ E MP LOY E E V S . I N V E S TO R O W N E R S H I P BY S TA G E EMPLOYEE VS. INVESTOR EQUITY BY STAGE Employees retain a majority ownership stake in a typical investor-backed company until the Series B stage. However, company founders still often lose the ability to control a company by themselves after a Series A. 100% 100% 75% 25% 40% 68% 58%55% 60% 45% 42% 32% Employee Ownership Investor Ownership
4. 4. EMPLOYEE DILUTION BY STAGE If you use all non-preferred shares as a proxy for employee ownership percentage, you can see that employee ownership “decays” from 100% to around 32% by the time the company is at a Series D or higher stage. Common + Convertibles 25% 50% 75% 100% 0% Common Only 100%100% 75% NO N- PRE FE RR ED S TO CK OWNERSHI P % BY STAG E Series Seed Series A Series B Series C Median Value 60% 45% 32% 42% Series D+ Mean Value
5. 5. EMPLOYEE OWNERSHIP FORMULA For the mathematically inclined, employee ownership almost perfectly ﬁts a logarithmic curve with each new round of funding. The “Employee Ownership Formula” is: Employee Ownership = -0.38 * ln ( Number of Rounds of Funding) + 1. E MP LOY E E O W N E R S H I P T R E N D L I N E BY S TA G E 28% 55% 83% 110% 0% Common Only Series SEED Series CSeries BSeries A 100% 32% 45% 75% Series D+ 60% 42% Log Trendline y = -0.378ln(x) + 1.0047 R 2 = 0.9953 Median Value
6. 6. FOUNDER OWNERSHIP BY STAGE We can deﬁne “founder ownership” as all common and restricted common stock. Founder ownership decreases from 86% to 30% by the Series B stage. It could actually be a little lower in later stages as optionees convert options to common stock. Common + Convertibles 25% 50% 75% 100% 0% Common Only C O MMO N + R E S T R I CT E D C O MMO N O W N E R S H I P BY S TA G E Series Seed Series A Series B Series C Series D+ Median Value Mean Value 86% 83% 59% 47% 30% 29% 17%
7. 7. PRE-MONEY VALUATIONS BY STAGE The distribution of pre-money valuations has a long-tail skewing toward a few companies with really high valuations so median values are signiﬁcantly lower than mean values. Pre-money valuations grow rapidly in a company’s later stages. \$50,000,000 \$100,000,000 \$150,000,000 \$0 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ \$174.4M \$62.0M \$40.7M \$25.6M \$10.5M \$0.9M\$1.1M \$200,000,000 ME A N A ND ME D I A N P R E - MO NE Y VA LUA TI O N BY S TA G E Mean Post-Money Median Post-Money
8. 8. Exp. Trendline y = 396314e 0.8945x R 2 = 0.92402 PRE-MONEY VALUATIONS TRENDLINE Mean pre-money valuations increase exponentially as companies progress to later stages. \$50,000,000 \$100,000,000 \$150,000,000 \$0 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ Mean Pre-Money \$174.4M \$62.0M \$40.7M \$25.6M \$10.5M \$0.9M\$1.1M \$200,000,000 P R E - MO N E Y VA LUA TI O N TR E N D L I N E BY S TA G E
9. 9. POST-MONEY VALUATIONS BY STAGE Mean and median post-money valuations diverge increasingly at later stages. This would indicate that the values of a subset of very highly valued companies pulls the average up but most companies don’t achieve such high valuations. ME A N A ND ME D I A N P O S T- MO NE Y VA LUA TI O N BY S TA G E \$50,000,000 \$100,000,000 \$150,000,000 \$0 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ Mean Post-Money Median Post-Money \$196.4M \$76.7M \$53.5M \$34.8M \$12.8M \$3.7M\$2.3M \$200,000,000
10. 10. 7% 14% 21% 0% 28% Series Seed Series A Series B Series C Series D+ ME D I A N E MP LOYE E D I LUTI O N BY S TA G E I N P E R C E NTA G E P O I NTS 15% 22% 22% 17% 15% “TYPICAL” DILUTION RATES Executives should expect dilution of between 15-25% in nearly any round no matter the stage. However, dilution does appear to be smaller at the earliest and latest stages of a company’s life. It peaks in the Series A and B.
11. 11. N UMB ER OF S H ARE HOLDERS BY STAG E 50 100 150 200 0 Common Only Common + Convertibles Series Seed Series A Series B Series C 17 30 38 51 90 Series D+ 164 200 NUMBER OR SHAREHOLDERS BY STAGE Number of shareholders often correlates with headcount but some companies offer equity to a broader range of employees. Here is the median number of equity shareholders at all stages.
12. 12. 10% 20% 30% 0% Common Only Common + Convertibles 40% Series SEED Series BSeries A Series C Series D+ I S S UE D A ND UNI S S UE D O P TI O NS BY S TA G E 10% 14% 15% 14% 14% 13% 14% Issued OPTION POOL PERCENTAGE BY STAGE The option pool typically stays just under 15% at any stage, if you include authorized but unissued options. Unissued
13. 13. USAGE OF EQUITY INSTRUMENTS BY STAGE Companies almost all use common, preferred, ISO, and NSO equity. Companies also use RSAs, though somewhat less frequently. RSUs, SARs, and SPRs appear much less frequently and typically in later-stage companies. U SA G E OF E QUI T Y I N STRUMENTS BY STAG E C o m m o n P r e f e r r e d R S A R S U I S O N SO S A R S P R 25% 50% C o m m o n O n l y C o m m o n + C o n ve r t i b l e S e r i e s S E E D S e r i e s A S e r i e s B S e r i e s C S e r i e s D + 0% 75% 100%
14. 14. RESTRICTED STOCK AWARDS (RSA) On average, RSAs represent a large ownership stake across a small number of shareholders. This is because RSAs are frequently used by founders to vest each other. \$8 \$15 \$23 \$0 Common Only Common + Convertibles 2.4 3.3 \$30 1.8 3.5 5.3 7.0 Series Seed Series A Series B Series C Series D+ 2.2 3.6 4.9 3.6 6.2 RSA Shareholders R E S T R I CT E D S TO C K A WA R D S ( R S A s) BY S TA G E 14% 27% 11% 11% 5% 5% 2% RSA Ownership %
15. 15. WATERFALL ANALYSIS • Capshare pioneered software-based waterfall analysis for private companies • Capshare’s waterfall analysis takes into account: - Liquidation preferences - Participation rights and caps - Conversion rates -Cumulative dividends - PIK dividends - Warrants with exercise prices less than their liquidation preference per share • Executives and shareholders can see a complete breakdown of equity proceeds in any hypothetical exit scenario THE FOLLOWI NG S LI D ES P ROVI D E A G G R E G A T E WA T E R FA L L A N A LYS I S DA TA
16. 16. EMPLOYEE WATERFALL VALUE BY STAGE Assuming each company is worth its latest post-money valuation, non-preferred shareholders (employees) would receive the following values in a liquidation scenario. Median results are much lower than median because larger deals skew the average. \$18 \$35 \$53 \$70 \$0 Common Only Common + Convertibles \$2.28 \$3.71 A G G R E G A T E E MP LOY E E WA T E R FA L L VA LU E S BY S TA G E ( \$ M) Series Seed Series A Series B Series C Series D+ \$8.26 \$63.07 \$21.53 \$17.87 \$29.61 Median ValueMean Value
17. 17. WATERFALL VALUE BY STAGE PER EMPLOYEE SHAREHOLDER Per employee waterfall proceeds peak around Series A and decrease thereafter as companies hire more employees. Founders still make more money each round but on average, employees make less. \$300 \$600 \$900 \$1,200 \$0 \$68.62 \$90.89 P E R E MP LOYE E WA TE R FA L L VA LU E S BY S TA G E ( \$000) \$276.57 \$410.92 \$200.04 \$53.02 \$242.31 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ Median ValueMean Value
18. 18. INVESTOR WATERFALL VALUE BY STAGE Assuming each company is worth its latest post money valuation, preferred shareholders (investors) would recieve the following values in a liquidation scenario. Again median values are much lower than mean values. \$35 \$70 \$105 \$140 \$0 \$0.0 \$0.0 A G G R E G A T E I N V E S TO R WA T E R FA L L VA LU E S BY S TA G E ( \$ M) \$4.55 \$16.90 \$133.37 \$31.95 \$45.5 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ Median ValueMean Value
19. 19. INVESTOR WATERFALL VALUE BY STAGE Investors make more and more per investor, even as the company grows. Investors proceeds are diluted far less than employee proceeds. P E R I N V E S TO R WA TE R FA L L VA LU E S BY S TA G E ( \$M) \$1.0 \$2.0 \$3.0 \$4.0 \$0.0 \$0.0 \$0.0 \$0.31 \$1.15 \$3.37 \$1.35 \$1.15 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+ Median ValueMean Value
20. 20. VOLUME (EQUITY ISSUANCES TO A SHAREHOLDER) The average number of equity issuance transactions (including electronic stock issuances) increases rapidly as companies grow. The volume is much higher including non-issuance transactions. E QU I T Y I S S UA N C E T R A N S A CT I O N S BY S TA G E 125 250 375 500 0 42 33 46 91 171 286 430 Common Only Common + Convertibles Series Seed Series A Series B Series C Series D+
21. 21. • Perform your own waterfall analysis • Offer personalized shareholder portals CAN WE HELP? • Manage your cap table in the cloud and share with all relevant parties • Model and record new rounds of funding • Issue electronic stock • Maintain your equity ledger • Manage all equity accounting • Offload complicated and time-consuming compliance work V I S I T w w w. ca p sh a r e . co m O R C A L L U S A T ( 415) 802- 2305
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