About 1,500 new companies are founded every day.
However, only a fraction of these entrepreneurial pursuits will eventually operate on a grand scale. With many of these companies propelled by venture capital funding, how do investors provide the cash—and get a piece of the startup pie?
Pie in the Sky
Today’s creative infographic from Fundera uses pie to visualize each stage of startup funding, from pre-seed funding to initial public offering.
It’s worth noting that numbers presented here are hypothetical in nature, and that startups can have all kinds of paths to success (or failure).
In the pre-seed funding round, the founder(s) pitch their business idea to potential investors. These are typically friends, family, angel investors, or pre-seed venture capital firms.
Since there is likely no performance data or positive financials to show yet, potential investors must focus on two primary features: the strength of the idea and the team.
The biggest factor in our decision-making is always the founding team […] that’s what success lives or dies on in this industry: the ability for founders to make really quick, good decisions.
At this stage, both the level of risk and potential payoff are at their highest.
After the initial stages, seed funding—the first official funding round for many companies—takes place. Entrepreneurs use the funds for market testing, product development, and bringing operations up to speed.
By this point, investors are generally looking for the company’s ability to solve a need for customers in a way that will achieve product-market fit. At this stage, ideally there is also some level of traction or consumer adoption, such as user or revenue growth. The level of risk is still quite high here, so investors tend to be angel investors or venture capitalists.
In each series funding, the startup generally raises more money and increases their valuation. Here’s what investors tend to expect in each round:
- Series A: Companies that not only have a great idea, but a strategy for creating long-term profit.
- Series B: Companies generating consistent revenue that must scale to meet growing demand.
- Series C (and beyond): Companies with strong financial performance that are looking to expand to new markets, develop new products, buy out businesses, or prepare for an Initial Public Offering (IPO).
Private equity firms and investment bankers are attracted to series C funding as it tends to be much less risky. In recent years, startups have been staying private longer. For example, Uber obtained Series G funding and debt financing before going public.
Initial Public Offering
Once a company is large and stable enough, it may choose to go public. An investment bank will commit to selling a certain amount of shares for a certain amount of money.
If the IPO goes well, investors will profit and the company’s reputation gets a boost—but if it doesn’t, investors lose money and the company’s reputation takes a hit.
Here’s how the example investment amounts break down at each stage:
|Pre-Seed||Seed||Series A||Series B||Series C||IPO|
|Amount Invested||< $1M||<$1.7M||<$10.5M||<$24.9M||<$50M||<$10.5M|
|Average Equity Stake||10-15%||10-25%||15-50%||15-30%||15-30%||15-50%|
An investor’s equity is diluted as other investors come on board, but their “piece of the pie” usually becomes more valuable.
The Venture Capital Funnel
How likely is it that a startup makes its way through the entire process? In a study of over 1,110 U.S. seed tech companies, only 30% exited through an IPO, merger, or acquisition (M&A).
Companies that reach a private valuation of $1B or more, known as unicorns, are even more rare at just 1%.
At each stage, natural selection takes hold with fewer companies advancing. Here’s a look at the entire funnel, with the “second round” generally corresponding to a series A stage, a “third round” generally corresponding to a series B stage, and so on.
Source: CB Insights
Notably, 67% of the companies stalled out at some point in the funding process, becoming either dead or self-sustaining. While startups carry a high degree of risk, they also present opportunities for substantial rewards.
Here’s How Much the Top CEOs of S&P 500 Companies Get Paid
Does high pay for CEOs translate into company performance? See for yourself in this visualization featuring the top CEOs of companies on the S&P 500.
How Much the Top CEOs of S&P 500 Companies Get Paid
How much do the CEOs from some of the world’s most important companies get paid, and do these top CEOs deliver commensurate returns to shareholders?
Today’s infographic comes to us from HowMuch.net and it visualizes data on S&P 500 companies to see if there is any relationship between CEO pay and stock performance.
For Richer or Poorer
To begin, let’s look at the highest and lowest paid CEOs on the S&P 500, and their associated performance levels. Data here comes from a report by the Wall Street Journal.
Below are the five CEOs with the most pay in 2018:
|Rank||CEO||Company||Pay (2018)||Shareholder Return|
|#1||David Zaslav||Discovery, Inc.||$129.4 million||10.5%|
|#2||Stephen Angel||Linde||$66.1 million||3.1%|
|#3||Bob Iger||Disney||$65.6 million||20.4%|
|#4||Richard Handler||Jefferies||$44.7 million||-14.9%|
|#5||Stephen MacMillan||Hologic||$42.0 million||11.7%|
Last year, David Zaslav led top CEOs by taking home $129.4 million from Discovery, Inc., the parent company of various TV properties such as the Discovery Channel, Animal Planet, HGTV, Food Network, and other non-fiction focused programming. He delivered a 10.4% shareholder return, when the S&P 500 itself finished in negative territory in 2018.
Of the mix of highest-paid CEOs, Bob Iger of Disney may be able to claim the biggest impact. He helped close a $71.3 billion acquisition of 21st Century Fox, while also leading Disney’s efforts to launch a streaming service to compete with Netflix. The market rewarded Disney with a 20.4% shareholder return, while Iger received a paycheck of $65.6 million.
Now, let’s look at the lowest paid CEOs in 2018:
|Rank||CEO||Company||Pay (2018)||Shareholder Return|
|#3||A. Jayson Adair||Copart||$203,000||82.2%|
|#4||Warren Buffett||Berkshire Hathaway||$398,000||3.0%|
|#5||Valentin Gapontsev||IPG Photonics||$1.7 million||-47.1%|
On the list of lowest paid CEOs, we see two tech titans (Larry Page and Jack Dorsey) that have each opted for $1 salaries. Of course, they are both billionaires that own large amounts of shares in their respective companies, so they are not particularly worried about annual paychecks.
Also appearing here is Warren Buffett, who is technically paid $100,000 per year by Berkshire Hathaway plus an amount of “other compensation” that fluctuates annually. While this is indeed a modest salary, the Warren Buffett Empire is anything but modest in size – and the legendary value investor currently holds a net worth of $84.3 billion.
Finally, it’s worth noting that while J. Jayson Adair of Copart was one of the lowest paid CEOs at $203,000 in 2018, the company had the best return on the S&P 500 at 82.2%. Today, the company’s stock price still sits near all-time highs.
Finally, let’s take a peek at the CEOs that received the highest shareholder returns, and if they seem to correlate with compensation at all.
|Rank||CEO||Company||Pay (2018)||Shareholder Return|
|#1||A. Jayson Adair||Copart||$203,000||82.2%|
|#2||Lisa Su||AMD||$13.4 million||79.6%|
|#3||François Locoh-Donou||F5 Networks||$6.9 million||65.4%|
|#4||Sanjay Mehrotra||Micron Technology||$14.2 million||64.3%|
|#5||Ken Xie||Fortinet||$6.8 million||61.2%|
Interestingly, three of highest performing CEOs – in terms of shareholder returns – actually took home smaller amounts than the median S&P 500 annual paycheck of $12.4 million. This includes the aforementioned A. Jayson Adair, who raked in only $203,000 in 2018.
That said, there is a good counterpoint to this as well.
Of the five CEOs who had the worst returns, four of them made less than the median value of $12.4 million, while one remaining CEO took home slightly more. In other words, both the best and worst performing CEOs skew towards lower-than-average pay to some degree.
The 20 Biggest Bankruptcies in U.S. History
There is always risk in business – but for these 20 companies, which caused the biggest bankruptcies in history, those risks didn’t quite pan out.
Doing business means taking calculated risks.
Regardless of whether you are opening a lemonade stand or you’re a leading executive at a Fortune 500 company, risk is an inevitable part of the game.
Taking bigger risks can generate proportional rewards – and sometimes, such as for the companies you’ll read about below, the risk-taking backfired to queue up some of the biggest bankruptcies in U.S. history.
Going For Broke
Today’s infographic comes to us from TitleMax, and it highlights the 20 biggest bankruptcies in the country’s history.
Companies below are sorted by total assets at the time of bankruptcy.
There are times when companies are forced to push in all of their chips to make a game-changing bet. Sometimes this pans out, and sometimes the plan fails miserably.
In other situations, companies were actually unaware they were “all-in”. Instead, the potentially destructive nature of the risk was not even on the radar, only to be later triggered through a global crisis or unanticipated “Black Swan” events.
The Biggest Bankruptcies in the U.S.
Here are the 20 biggest bankruptcies in U.S. history, and what triggered them:
|Rank||Company||Year||Assets at Bankruptcy||Downfall|
|#1||Lehman Brothers||2008||$691 billion||2008 financial crisis|
|#2||Washington Mutual||2008||$328 billion||2008 financial crisis|
|#3||Worldcom Inc.||2002||$104 billion||Accounting scandal|
|#4||GM||2009||$82 billion||Massive debt|
|#5||CIT Group||2009||$71 billion||Credit crunch|
|#6||Pacific Gas & Electric||2019||$71 billion||Wildfires|
|#8||Conseco||2002||$61 billion||Failed acquisition strategy|
|#9||MF Global||2011||$41 billion||European sovereign bonds|
|#10||Chrysler||2009||$39 billion||Massive debt|
|#11||Thornburg Mortgage||2009||$37 billion||Declining mortgage values|
|#12||Pacific Gas & Electric||2001||$36 billion||Drought|
|#13||Texaco||1987||$35 billion||Contract dispute|
|#14||FCOA||1988||$34 billion||Savings and loan crisis|
|#15||Refco||2005||$33 billion||Accounting fraud|
|#16||IndyMac Bancorp||2008||$33 billion||Mortgage market collapse|
|#17||Global Crossing||2002||$30 billion||Plummeting world economy|
|#18||Bank of New England||1991||$30 billion||Bad loans|
|#19||General Growth Properties||2009||$30 billion||Failed acquisition strategy|
|#20||Lyondell Chemical||2009||$27 billion||Decline in demand|
The data set on the biggest bankruptcies is organized by assets at time of bankruptcy. Therefore, they are not in inflation-adjusted terms, meaning the list skews towards more recent events.
This makes the impact of the 2008 financial crisis particularly easy to spot.
The events and consequences relating to the crisis (loan defaults, illiquidity, and declining asset values) were enough to take down banks like Lehman Brothers and WaMu. The after effects – including a slumping global economy – led to a second wave of bankruptcies for companies such as GM and Chrysler.
In total, nine of the 20 biggest bankruptcies on the list occurred in the 2008-2009 span.
A Dubious Distinction
You may also notice that one company was on the list twice, and this was not an accident.
Pacific Gas & Electric, a California company that is the nation’s largest utility provider, has the dubious distinction of going bankrupt twice in the last 20 years. The first time, in 2001, resulted from a drought that limited hydro electricity generation, forcing the company to import electricity from outside sources at exorbitant prices.
The more recent instance happened earlier this year. Facing tens of billions of dollars in liabilities from raging wildfires in California, the utility filed for Chapter 11 protection yet another time.
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