Survey of 700+ startup founders: 31% don't intend to IPO, 67% now say VCs have more negotiating power
First Round Capital just published its second-ever State of Startups report, and it's chock full of interesting sentiments from a survey of more than 700 founders …
Context & Ripple Effects
First Round Capital's second State of Startups survey lands at the tail of a year when investors themselves braced for a correction: an earlier [[a:864504|Upfront survey found 91% of VCs expecting valuations to fall in the first half of 2016, with 62% saying their portfolios were already cutting costs]]. The founder-side data now quantifies what that repricing felt like on the other side of the table.
The headline findings — 67% of 700+ founders conceding VCs hold more negotiating power, and 31% who simply do not intend to IPO — line up with a November study of 79 public tech S1 filings showing median founder ownership at exit was just 11%, versus 62% for VCs. Together they sketch a market where going public is losing its pull even as investor terms tighten.
First-order effects
- For founders heading into 2017 raises, the survey confirms weaker hand: two-thirds acknowledge investors set the terms, so cap-table concessions and down-round pressure become the default negotiation posture.
- A 31% no-IPO cohort reshapes exit planning for First Round's portfolio and peers — acquisition or staying private becomes the explicit endgame for roughly a third of companies rather than a fallback.
Second-order effects
- The leverage shift proves durable rather than cyclical: a year later, First Round's follow-up survey shows 53% of founders still saying investors had more sway in their most recent deal (with hiring pain also flipping from engineers to sales leaders) — competitors' funds can no longer win deals on valuation alone.
- If fewer companies target listings, late-stage capital has to underwrite longer private holds, pushing secondary sales and structured rounds up the agenda for growth-stage funds.
Third-order effects
- By First Round's [[a:948930|2019 edition, where 65% of founders expected 2020 fundraising to be hard and a third feared the end of a tech bubble]], the annual survey had hardened into a standing barometer: recurring founder-sentiment data now functions as an early-warning system for where the venture cycle stands.
The trend: Founder sentiment surveys are becoming the venture industry's cycle gauge, tracking a structural tilt of negotiating power from founders toward concentrated pools of capital as the IPO path narrows.