The source first projects an exit value from revenue and a valuation multiple. It then calculates how much value an investor’s stake must return to meet a target multiple. Dividing the required proceeds by the projected exit value gives the required ownership at exit.

This is a negotiation and valuation model driven by assumptions. Revenue, the exit multiple, financing needs and the target return can all change. Show those inputs explicitly and avoid treating the resulting valuation as an independently observed market fact.

The source’s second example introduces another round: 50m invested after two years, targeting 20×. At the same 4,000m projected exit, that investor requires 1,000m of proceeds and therefore 25% of the company at exit.

The first investor still needs 10% at exit. Because the later round leaves old holders with 75%, the first investor must initially own 10%/75% = 13.333%. The corresponding current post-money value is 10m/13.333% = 75m, rather than the 100m from the one-round example.

When each round sells a fraction of the enlarged company, earlier holders retain the product of the fractions left after those rounds. Adding the percentages sold generally gives the wrong answer because the percentages use different denominators.

Track share counts to verify the percentage shortcut. Include option-pool changes and converting instruments when the agreed basis requires them. A model that treats all rounds as simple common-equity issuances cannot describe every negotiated financing structure.

A fully diluted percentage can be used to estimate simple pro-rata proceeds only under the rights and capital-structure assumptions of the model. Later preferences, debt and transaction costs can alter the amount a holder receives.

The source’s multi-round return chart combines ownership changes with a common hypothetical exit. It demonstrates why a later investor can have a smaller return multiple at the same exit value. More capital, a higher entry valuation and less remaining time can produce a different investment proposition.

The difference between the two columns is a single assumption: whether a 20% Series B happens before exit. Proceeds are pro rata; lesson 32 adds the 1x non-participating preferences.

Percentages in brackets are the stake the lead needs at the Series A. The exit assumption moves the answer more than the dilution assumption does, so the founders' best evidence is whatever supports year-6 revenue: cohort retention for multi-location groups, expansion within accounts, and the Northpoint pipeline.