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A company does not always need to sell at higher valuation for an investor to earn profit. It may be very possible to invest in SnapChat at $10B valuation and s
by rokhayakebe 12y ago
A company does not always need to sell at higher valuation for an investor to earn profit. It may be very possible to invest in SnapChat at $10B valuation and still rip a benefit if they sell for $2B.
- HockeyPlayer 12y agoCan you explain how?
- Sambdala 12y agoLiquidation preference.
- rokhayakebe 12y agoWhen someone invest 200M at a 1B valuation (for 10% ownership), remember that only the $200M are real at the moment. The rest, $800M, is "confidence in the team + hope in the market." This is especially true when the company makes no revenue. So in the event the company sells for $300M, the investor get first get his $200M out. Then get 20% of the remainder. He won.