Ownership Dynamics within Founder Teams: The Role of External Financing
This paper examines how founders within start-up teams dynamically re-adjust their relative ownership stakes. It leverages a unique dataset from British Columbia, Canada, which contains detailed information on founder ownership over time. Two trade-offs between efficiency and fairness are identified, one at the time of founding, the other as the venture develops. Teams with a preference for fairness at the start, as witnessed by an equal division of founder shares, also exhibit a dynamic preference for fairness, as witnessed by a reluctance to change ownership over time. Relative founder stakes are more likely to change when a company raises investments. Larger rounds, and lower valuations are associated with bigger changes in relative founder stakes.
Authors: | Hellmann, Thomas ; Schure, Paul ; Tergiman, Chloe ; Vo, Dan H. |
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Publisher: |
John Wiley & Sons, Inc. |
Saved in:
Type of publication: | Article |
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Language: | English |
Notes: | Hellmann, Thomas, Schure, Paul, Tergiman, Chloe and Vo, Dan H. Ownership Dynamics within Founder Teams: The Role of External Financing. Strategic Entrepreneurship Journal. (Accepted) |
Source: | BASE |
Persistent link: https://www.econbiz.de/10011843649
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