If somebody buys 10% of the company for $200M, we infer that the rest of the company is worth $1.8B, even though you couldn't actually sell it for that price.
If I understand correctly, the point is that the latest investor effectively buys between 10% and 100% of the company, depending on what it eventually gets sold for.
Yes, exactly. They have 10% of the shares but they might end up with more than 10% of the proceeds of a sale, if the sale price is less than $2B. That has an impact on the value of the remaining shares.
I think it would be more accurate to say they're getting a promise to pay back their investment with interest (the "bond-like" comment in the article), and also 10% of the company stock. It could turn out that the "bond" is more valuable, or the stock is more valuable, or they're both totally worthless.
A major difference between big early investors and retail investors is that retail investors don't get that "bond-like" guarantee. Hence there's greater risk of loss, and retail investors should value the stock much lower, but frequently don't.
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If I understand correctly, the point is that the latest investor effectively buys between 10% and 100% of the company, depending on what it eventually gets sold for.
Yes, exactly. They have 10% of the shares but they might end up with more than 10% of the proceeds of a sale, if the sale price is less than $2B. That has an impact on the value of the remaining shares.
I think it would be more accurate to say they're getting a promise to pay back their investment with interest (the "bond-like" comment in the article), and also 10% of the company stock. It could turn out that the "bond" is more valuable, or the stock is more valuable, or they're both totally worthless.
A major difference between big early investors and retail investors is that retail investors don't get that "bond-like" guarantee. Hence there's greater risk of loss, and retail investors should value the stock much lower, but frequently don't.