About 84% of founders of venture-backed US startups end up with zero exit value, and the top 2% capture 80% of all founder exit value, according to NBER working paper 34512. Its authors are Eduardo Azevedo, Florian Scheuer, Kent Smetters and Min Yang of Wharton and the University of Zurich.
A version spreading on X puts the zero-payout share at 88%, and some secondary websites cite about 250,000 founders and a top 1% taking 79%. None of those three figures appears in the paper, which we read in full.
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The key insight: NBER Working Paper 34512 finds that 84% of VC-backed US founders get zero exit value and the top 2% capture 80% of founder exit value, across 185,678 founders of companies founded from 1987 to 2021. The viral 88% figure is not in the paper. Taxing gains as they accrue, with refunded credits, would lift the share of founders with a payout from 16% to 47%, the authors estimate.
The authors built a dataset of 95,968 VC-funded US companies founded between 1987 and 2021, with 185,678 founders, from PitchBook, Capital IQ, CB Insights, PrivCo and Compustat. They used the capitalization tables in 1,077 S-1 filings to split each company’s founder stake among its founders.
The 84% has two sources, the paper says. Founders are collectively wiped out in 74% of cases, through outright failure or exits where investors take all the proceeds. Even in successful exits, there is a 38% chance that an individual founder leaves before the exit and gets nothing.
Share of VC-backed US founders by exit outcome, and their share of total founder exit value, from NBER Working Paper 34512 (185,678 founders of companies founded 1987-2021). The 14% middle group is our arithmetic.
The Average Is $7.2 Million; the Typical Winner Gets $5.6 Million
The average founder exit value is $7.2 million after a 20% capital gains tax, the paper says. Among founders with a positive payout, the mean is $45.6 million but the median is $5.6 million, so the mean is about 8.1 times the median by our arithmetic. The 99th percentile is $620.6 million.
The paper calls the 80% share held by the top 2% “an extreme version of Pareto’s 80/20 principle”. By our arithmetic, the other 14% of founders with a payout share the remaining 20% of value. The paper covers founders only, not investors; for how large stakes in one AI company are being valued and sold, see FTX’s old Anthropic holding and the Anthropic co-founders’ share sales.
The Tax Finding: 16% to 47%
The paper models a switch from today’s realization-based capital gains tax to taxing gains as they accrue. That would cut the average founder’s ownership at exit by about 25%, but with complete tax credits the share of founders receiving a positive payoff rises from 16% to 47%, the authors write. That is nearly three times as many, by our arithmetic.
The authors find that founders with no or moderate risk aversion prefer the current system, while more risk-averse founders prefer accrual taxation. They estimate that a 2% annual wealth tax would dilute founders about as much as fully taxing unrealized gains, but with no insurance benefit, because it gives no credits after down rounds.
The Structural Read
As we read the paper, the average founder outcome of $7.2 million describes almost nobody: most founders get nothing, and among those who get something the median is $5.6 million. The authors’ tax result turns on the same skew, trading a smaller top tail for more founders with some payout.
Azevedo, Scheuer, Smetters and Yang, NBER Working Paper 34512
“Roughly 84% of founders end up with a zero exit value”
Three Implications
FOR FOUNDERS The paper puts the chance of zero exit value at 84%, from a 74% chance that founders are collectively wiped out and a 38% chance that an individual founder leaves before a successful exit.
FOR THE VIRAL FIGURE The paper states 84%, not 88%, and 185,678 founders, not about 250,000; it says the top 1% of positive founder payoffs account for 45% of value, not 79%.
FOR TAX POLICY Accrual taxation would cut average founder ownership at exit by about 25%, the authors estimate; a 2% annual wealth tax dilutes about as much but gives no credits after down rounds.
One of the framework’s tools, the Barbelled Distribution Economy, says: “value concentrates at the extremes (massive-scale platforms and deep-niche specialists); the middle hollows out.”
As we read it, the paper’s founder data show a version of that shape at the level of individual founders: 2% hold 80% of the value and 84% hold none. The framework predates the paper and does not discuss it.
Share of founders receiving a positive payoff under today’s realization-based capital gains tax and under accrual-based taxation with complete tax credits. Source: NBER Working Paper 34512.
What Is Not Established
The paper is a November 2025 NBER working paper and has not been peer-reviewed, the NBER notes on its cover. The authors write that PitchBook tends to over-represent successful deals, so the payout figures may be optimistic. We did not find the origin of the 88% figure, and we did not contact the authors.
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NBER working paper 34512 puts the share of VC-backed founders with zero exit value at 84%, not 88%, across 185,678 founders, and finds the top 2% capture 80% of founder exit value. Under accrual taxation with refunded credits, the share of founders with any payout would rise from 16% to 47%, the authors estimate.
A note on sourcing. All figures on founders, payouts and tax scenarios are from NBER Working Paper 34512 by Eduardo Azevedo, Florian Scheuer, Kent Smetters and Min Yang (November 2025), which we read in full; it has not been peer-reviewed. The 88%, 250,000 and 79% figures are from posts on X and secondary websites, not the paper. Ratios and the 14% middle group are our arithmetic. The authors were not contacted for this piece.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
