Founder Dilution

Posted on February 20, 2009 by Simeon Simeonov

Founders often ask me, “If I own X% after my first investment round, how much will I be diluted through financings until exit?”. There are rules of thumb but there is no good data about what happens to common stock. So, why not survey entrepreneurs and find out? I’ve set up a simple survey using Google Forms. Share your story. I’ll publish the summary data.

About Simeon Simeonov

I'm an entrepreneur, hacker, angel investor and reformed VC. I am currently Founder & CTO of Swoop, a health AI platform. Through FastIgnite I invest in and work with a few great startups to get more done with less. Learn more, follow @simeons on Twitter and connect with me on LinkedIn.

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9 Responses to Founder Dilution

Steven Kane says:

February 21, 2009 at 12:18 pm

hi simeon

this is a great thing to do – i look forward to your data

one note – your survey only allows for companies with exits. but to get a better picture of the “market” we should also look at venture funded companies which are still pre-exit. true, founders and common shareholders may end up with further dilution, but knowing how much dilution they have already taken to get to wherever they are would be very worthwhile

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V. Dimitroff says:

February 21, 2009 at 9:50 pm

Pre-exit would be interesting, indeed – but scenarios vary so much, more questions need to be asked and this should better be left for a deeper, comprehensive survey.

Put 2 past companies but they may be anomalies (by size, sector and geography) and may even distort results if the sample is small – consider excluding.

Final results will be still very interesting –
V.

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Simeon Simeonov says:

February 22, 2009 at 5:42 pm

Steve, it’s very hard to pull any solid data out of pre-exit companies as they are work in progress. That’s why I’m focused on where founders end up.

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Simeon Simeonov says:

February 22, 2009 at 5:42 pm

Vladimir, any and all data is valuable. Thanks for sharing.

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Roger Atla says:

November 25, 2009 at 12:37 am

Hi Simeon, did you ever post the ‘founder’s dilution’ table? If so, where can we find it?

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- Simeon Simeonov says:
  
  November 25, 2009 at 12:56 am
  
  Unfortunately, the responses weren’t sufficient to create a good data set. I decided not to publish data that could be more wrong than right. New entries are trickling in, though, so hopefully there will be something to report in 2010.
  
  Reply
CEO says:

December 5, 2015 at 9:10 pm

any updates on this?

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- Simeon Simeonov says:
  
  December 5, 2015 at 9:57 pm
  
  Not enough data to make the analysis meaningful and cap tables have changed significantly over the past few years with the meteoric rise of capped convertible notes. It now takes much longer to understand exactly how much founders will be diluted.
  
  Reply
  - Pete Borum says:
    
    August 27, 2016 at 10:26 pm
    
    Noted, but can’t you post with some explicitly stated assumptions and caveats? No response is less helpful than something even directionally accurate.
    
    Reply