Time to IPO: An Analysis of Successful Harvard-Founded Startups
Exploring the time to exit for Harvard's 36 unicorns founded since 2006
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Introduction
Since 2006, 36 companies founded from the The Harvard startup ecosystem have IPO’d, representing over $300B in total exit value. In the last 5 years, 28 of those companies IPO’d for an aggregate $279B, as detailed in my recent post. Whether you’re an investor thinking about timing of DPI or a founder curious about exit timeline, we explore how long Harvard founders have historically taken to IPO. Dataset parameters for included companies can be found at the bottom of this report.
Key Findings
The average and median time from founding to IPO for a Harvard-founded startup is roughly the same at 9 years, with a range from 4 to 15 years
By time to IPO, top quartile Harvard-founded companies reach an exit in 7 years. “Bottom” quartile startups take an average of 10.5 years
3 startups managed to IPO within 4 years
The median time to IPO has sped up in more recent cohorts, from 12 years in ‘06 - ’08 to 8 years in ‘12 - ‘14 — 4 years quicker
Companies that IPO for $1B - $4B do so about 1.5 years faster than Harvard-founded startups that IPO for $4B - $10B
Years From Founding to IPO, ‘06 - Present (n=36)
Diving in, our research shows that the average and median time from founding to IPO both sit right at 9 years with a range from 3 years to 15 years. By time to IPO, top quartile companies reach an exit in 7 years while the 25th percentile of time to IPO is 10.5 years.
Below is the distribution of the number of years to IPO for 36 Harvard-founded IPOs. The distribution is slightly skewed right, with a median of 9 years.
Years From Founding to IPO, by Year Founded (n=36)
Segmenting the data into cohorts by year founded uncovers even more interesting insights. As you can see in the chart below, Harvard-founded companies, on average, have achieved IPOs significantly faster in more recent years. For example, the median time to IPO went from 12 years in ‘06 - ’08 to 8 years in ‘12 - ‘14 — 4 years quicker.
I pose the question for you for response in the comments: why do you think companies have IPO'd quicker in recent cohorts?
Years From Founding to IPO, by Exit Valuation (n=36)
Similarly, I segmented the data into exit valuation cohorts to analyze the relationship between time to IPO and exit valuation. Unsurprisingly, I found that the median time to IPO moves in lockstep with the IPO valuation; companies that have larger IPOs use more time to increase their size before an IPO.
As illustrated in the chart below, the median time to IPO for a company worth between $1B and $4B was 8.5 years, nearly 1.5 years faster than a company worth between $4B and $10B.
Change in Time to IPO, by Year Founded & Exit Valuation
More clearly visualized, you can see the change in time to IPO by year founded and exit valuation in the charts below. The median time to IPO dropped 4 years from the ‘06 - ‘08 to the ‘12 - ‘14 cohort. Companies that IPO for $1B - $4B do so about 1.5 years faster than Harvard-founded startups that IPO for $4B - $10B.
Time to IPO, by Notable Companies
Amongst the 36 IPOs, below I have selected what I believe to be the most well-known startups across the range of years to exit. How many years did it take your favorite Harvard-founded unicorn to IPO?
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Dataset Parameters
Harvard-founded; At least one co-founder attended a Harvard school
Company was founded after 2006 and successfully IPO’d
Bio- and life-science startups excluded
The views expressed herein are solely the views of the author(s) and are not necessarily the views of Phoenix Investment Club I LLC or any of its affiliates. They are not intended to provide, and should not be relied upon for, investment advice.