Founders often dream about the IPO moment—the bell-ringing, the headlines, the validation. But what’s often overlooked is what ownership actually looks like by the time you get there.

On the latest Heart of Healthcare podcast, Halle Tecco and I dove into this question: How much equity do digital health founders really have when they go public? Spoiler: for most, it’s less than you think.

Halle’s Data Tells the Story

Halle worked with one of her former students to analyze the last 34 digital health IPOs (excluding SPACs). The findings were eye-opening:

69% of co-founders owned under 5% at IPO

44% of founders had no reported equity at IPO

The median individual ownership per founder: just 2%

These aren't outliers—they're public record. From Smile Direct Club to Doximity to Hinge and Omada, the analysis reveals a sobering truth: founder ownership can be highly diluted by the time of a public offering, especially in capital-intensive sectors like digital health.

You can read Halle’s full report and subscribe to her newsletter here.

My Take: Dilution Is the Rule, Not the Exception

As someone who’s worked with dozens of founders through every stage—from seed to IPO—I wasn’t shocked, but the numbers are still stark.

Yes, some founders buck the trend. Hinge Health’s founders collectively retained nearly a quarter of the company at IPO, which is exceptional given how much they raised. But those are rare outcomes. In most cases, founders are trading equity for capital—and over time, the trade adds up.

That’s why I always tell my clients: you don’t protect your ownership at the IPO—you protect it starting with your first term sheet.

Clean Terms, Long Runway

The urge to optimize for valuation—especially during hot markets—can lead to complicated structures: 2x liquidation preferences, participating preferred, stacked terms that weigh down the cap table and leave founders behind. When the market turns, those structures can become toxic.

Founders who instead accept “clean terms”—like 1x non-participating preferred stock—set themselves up for better outcomes, even if it means accepting a down round or a more modest valuation. As I said on the podcast: “Take the medicine. Keep it simple. Live to fight—and win—another day.”

A Final Word on Alignment

In the best outcomes I’ve seen, founders remain aligned with their mission and their cap table. They raise what they need, on terms that allow them to keep building—not just for the next milestone, but for the long-term.

The IPO may be a finish line of sorts, but it’s also a handoff. And founders should cross it owning enough to feel proud—not just grateful they made it.

Listen to full episode, “Digital Health Download: June 2025," where we also unpack trends in digital health exits, the rise of private equity-backed IPOs, and the lessons Hinge Health offers founders navigating this tough market.