Dear SaaStr: If We Hire a CEO for My StartUp, How Much Equity Do They Get?

Q: Dear SaaStr: If I Hire a CEO for My StartUp, How Much Equity Do They Get?

There’s no magical answer, but for venture-backed start-ups, for years VCs have aligned on around 6%-8% equity for a non-founder / outside CEO. As you approach IPO and very late stage, that often goes down.  And if they join earlier, sometimes it’s more, as more dilution is coming.

A few examples.

Dev Ittycheria joined MongoDB as CEO after the Series B, and had 6.3% at IPO:

Jennifer Tejada joined PagerDuty as a non-founder CEO, similarly had 6.4% at IPO as well:

Gregg Schott joined Mulesoft as CEO after founder Ross Mason, and going into the IPO had about 3%:

For founders, there’s no formula. It’s more a function of how much dilution a start-up takes, and that can vary wildly based on # rounds, valuation, etc.

Based on an analysis I did a little while back here, the average Founder-CEO ends up owning about 14% at IPO:

A bit more here: At the Top SaaS Companies, Most Co-Founders Are Not Equal (And That’s OK) | SaaStr

Published on February 3, 2022

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