82 breakaway-growth companies have organized aligned-liquidity programs worth more than $3.6 billion over the past two and half years. On average, participating companies are 8 years old, have 436 employees, and have reached a funding stage of Series D or beyond. They tend to ply their trade in the software, media, consumer, and commerce sectors, where the average deal size in the first half of 2016 has been $45.39 million, according to Nasdaq Private Market.
Considering a backdrop of breathtaking private valuations and, in some cases, declining public valuations, one might conclude that sellers are rushing for the pay window. But the highest-performing startups aren’t motivated to allow employees to cash out and head to the beach. They aim to structure programs that provide team members with just enough liquidity, rarely exceeding 10 percent of their vested common stock, to deal with important matters at home so they can return their attention to matters at work. They want to take away the bite of those distracting life moments, just when the company most needs their patience and determination.
These companies often desire to remain private and independent for several more years, as they work out kinks in the business. Companies going public today are, on average, 11 years old (Jay Ritter, University of Florida) and today’s breakaway-growth companies want the flexibility to IPO at a time of their choosing. And to stay strong until their IPO, they need to retain their most precious assets—their team members—in an environment where an employee’s average tenure is no more than 2.5 years at any one company (HackerLife).
It has been a privilege for us here at Founders Circle to have invested, through Fund I, in nearly 1,000 people across 24 breakaway-growth companies. By helping them relieve life’s pressure valve, we’ve also helped managers and directors orient everyone toward the company’s long-term needs.
We’re looking forward to doing the same with Fund II so that, when life happens, startup teams can just take it all in stride.