import React, { useState, useMemo } from 'react'; import { LineChart, Line, XAxis, YAxis, CartesianGrid, Tooltip, Legend, ResponsiveContainer } from 'recharts'; const VCLiquidationSimulation = () => { const [investmentAmount, setInvestmentAmount] = useState(1000000); const [multiple, setMultiple] = useState(1); const [hasParticipation, setHasParticipation] = useState(false); const [ownershipPercentage, setOwnershipPercentage] = useState(20); const calculateVCPayout = (exitValue) => { const liquidationPreference = investmentAmount * multiple; const ownershipPayout = exitValue * (ownershipPercentage / 100); if (hasParticipation) { // With participation, VC gets liquidation preference plus pro-rata share of remaining return Math.min(exitValue, liquidationPreference + ownershipPayout); } else { // Without participation, VC gets the greater of liquidation preference or ownership payout return Math.max(liquidationPreference, ownershipPayout); } }; const generateData = useMemo(() => { const data = []; for (let exitValue = 0; exitValue <= 10000000; exitValue += 100000) { const vcPayout = calculateVCPayout(exitValue); const founderPayout = Math.max(0, exitValue - vcPayout); data.push({ exitValue, vcPayout, founderPayout, }); } return data; }, [investmentAmount, multiple, hasParticipation, ownershipPercentage]); return (

VC Liquidation Preference Simulation

Investment Amount: ${investmentAmount.toLocaleString()} setInvestmentAmount(Number(e.target.value))} className="w-full" /> Liquidation Preference Multiple: {multiple}x setMultiple(Number(e.target.value))} className="w-full" /> VC Ownership Percentage: {ownershipPercentage}% setOwnershipPercentage(Number(e.target.value))} className="w-full" /> setHasParticipation(e.target.checked)} /> {' '}Participation

`$${(value / 1000000).toFixed(1)}M`} label={{ value: 'Exit Value', position: 'insideBottom', offset: -5 }} /> `$${(value / 1000000).toFixed(1)}M`} label={{ value: 'Payout', angle: -90, position: 'insideLeft' }} /> `$${(value / 1000000).toFixed(2)}M`} labelFormatter={(value) => `Exit Value: $${(value / 1000000).toFixed(2)}M`} />

Explanation

This simulation shows how liquidation preferences affect the payout structure between VCs and founders at different exit values. Adjust the parameters to see how they impact the distribution of returns.

Investment Amount: The amount invested by the VC.
Liquidation Preference Multiple: Determines the preference amount (Investment * Multiple).
VC Ownership Percentage: The VC's equity stake in the company.
Participation: If off, VC gets the greater of preference or ownership %. If on, VC gets preference plus pro-rata share of remaining (capped at 100% of exit value).

); }; export default VCLiquidationSimulation;

💰 VC Liquidation simulator