Ownership Dynamics within Founder Teams: The Role of External Financing

Hellmann, Thomas, Schure, Paul, Tergiman, Chloe and Vo, Dan H. (2017) Ownership Dynamics within Founder Teams: The Role of External Financing. Saïd Business School Working Paper, Oxford.

Download (2MB) | Preview


The paper examines how founders within a start-up team dynamically re-adjust their relative ownership stakes. It identifies a trade-off between efficiency and fairness, both at the time of founding, and as the venture develops. The analysis shows that relative founder stakes are more likely to change in the presence of external investors. Larger rounds, and lower valuations are also associated with more founder ownership changes. Founder teams that emphasize fairness at the start, initially splitting their equity holdings equally, are subsequently less likely to modify their relative ownership arrangements. The paper leverages a unique dataset from British Columbia, Canada, which contains detailed information on founder ownership over time.

Item Type: Oxford Saïd Research Paper
Keywords: finance
Subject(s): Finance
Date Deposited: 17 Aug 2017 08:55
Last Modified: 03 Oct 2018 09:03
URI: http://eureka.sbs.ox.ac.uk/id/eprint/6487

View statistics

Actions (login required)

Edit View Edit View