NBER study of 157k startups: 88% of VC-backed founders get zero at exit
SumitGup · x · 2026-10-26
An NBER working paper (Azevedo, Scheuer, Smetters & Yang) analyzed 157k US startups and 348k founders across 40 years of VC deals using SEC filings and other sources. Founder returns are extremely skewed: 84-88% of VC-backed founders receive zero financial proceeds at exit, while the top 1-2% capture 80% of total exit value.
The mechanism: VCs structure deals so they get paid first; founders go to the back of the line—even a company sold for hundreds of millions can leave founders with nothing.
The paper also models capital gains tax regimes: switching from realization-based to accrual-based taxation would dilute founder ownership at exit by 25% on average, but with refundable tax credits the share of founders with positive payoffs would rise from 16% to 47%, effectively insuring failures. Founders with low/moderate risk aversion prefer the current system; a 2% annual wealth tax has similar dilution effects but no risk-sharing benefit.
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