I never understood how venture investments worked even though I studied economic science. Let‘s say WeWork for example. If they got 17 billion as an investment and are now bankrupt. Are the owners still rich or broke and blacklisted for future investments idk

Question

I never understood how venture investments worked even though I studied economic science. Let‘s say WeWork for example. If they got 17 billion as an investment and are now bankrupt. Are the owners still rich or broke and blacklisted for future investments idk

In: 755

Answer 1

If you give me 1 billion dollars I’ll give you 1/17th of my company. If the company becomes worth more money in the future, you can sell the part you own for more money. For example if the company is worth 34 billion you can sell your part of the company for 2 billion dollars. Now alternatively, if the company goes out of business, you won’t find anyone who would buy the fraction you own and don’t have money.