If we know the amount invested by the venture capitalist, his liquidation and equity, How do we calculate the profit the venture capitalist makes after selling the company?

Nov 19 2013 01:40 AM

If amount invested = $1 million

Liquidation Pref = 2x

Amount on Exit = $10 million

Equity stake = 10%

Then the investor will get

2x the investment = $ 2 million +

10% of the remaining $8 million = $800,000

So investor gets $2.8 million

Nov 26 2013 03:56 PM
Liquidation Pref = 2x

Amount on Exit = $10 million

Equity stake = 10%

Then the investor will get

2x the investment = $ 2 million +

10% of the remaining $8 million = $800,000

So investor gets $2.8 million