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While it's a widely known fact that founders see their ownership stakes decrease as they raise capital, it's always surprising to see by how much. If all goes well its fine, but in the case that things don’t go well, the economics can turn against founders fairly quickly.
So what does that dilution actually look like for founders/founding teams as they move through their capital raises? How much should founders expect to own after raising over $50 million? Hint: It's not a lot. To get cold hard data, we turned to the results of J.Thelander Consulting’s private company option pool and ownership survey, which includes responses from 380 private venture-backed companies in the US. One key thing to know is that when it comes to capital requirements and valuation multiples, no two industries are the same. As a result, founders see different levels of dilution depending on their industry. So instead of showing all companies lumped together, we had J.Thelander Consulting break it out by biotech, medical devices and tech.
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