Quiz-Assume an investor who invested $1 million holds 10% in your company and has a 1x liquidation preference. If you sell your company for $1 billion how much will this investor get?


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Could you tell provide me the calculation to get correct answer

2 Answer(s)


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Investor takes away $1m*.1=$.1m
Out of remaining $1000-$.1=$999.9 million investor will get 10% =$99.99million
Investor gets =$99.99+$.1 million =$100.09 million

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Investor gets to cash out by 2 steps here -
1. 1x Liquidation preference - first the investor will take out his/her $1 million
Remaning amount left is $999 million
2. Now investor will additionally get 10% of $999 million which is $99.9 million
So total cash investor gets is $99.9+$1 = $100.9 million