Demystifying Startup Equity with Data Science
What percentage of ownership do investors acquire at each financing stage?
If you’re a startup founder, you may struggle to find a reasonable percentage of equity to give your investors in return for their capital. While this is still something you need to figure out on a case by case basis, here’s some data to help guide your judgment.
Background
Earlier this year my research lab at Radicle released a working paper and online model that makes it easy for anyone to approximate an undisclosed startup valuation. The log-log model we published uses the amount of capital raised by the startup and the financing round’s stage classification to predict the valuation. It’s super simple and works reasonably well.
Take this article from Fortune in April of 2019. Out of the 24 venture deals presented in that article, only one has a disclosed valuation — Outreach with a $114m Series E valued at $1.1b. If you input those values into our online model, you’ll get an estimated valuation of approximately $1.1b.
