This is an iconic simulator created by Professor Ethan Mollick at the Wharton School.

It visually explains the payoff differences for a startup and a Venture Capitalist (VC) with liquidation preferences.

This simulation will help users understand how different exit scenarios affect the returns for both parties.

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Key Features

1. Interactive controls:some text
   • Initial Investment: Users can set the amount of money the VC initially invests.
   • Liquidation Multiple: This slider allows users to adjust the liquidation preference multiple (1x to 3x).
   • VC Ownership Percentage: Users can set the percentage of the company the VC owns after investment.
2. Payoff calculation:some text
   • The simulation calculates payoffs for exit values ranging from $0 to $5 million.
   • It considers the liquidation preference and the VC's ownership stake.
   • The VC's payoff includes both the liquidation preference and their share of remaining value.
   • The startup's payoff is the remaining value after the VC's payoff.
3. Visual representation:some text
   • A line chart shows how the payoffs for both the VC and the startup change as the exit value increases.
   • The x-axis represents the exit value, while the y-axis shows the payoff amounts.
   • Two lines represent the VC's payoff (purple) and the startup's payoff (green).

This simulation helps users understand:

1. How liquidation preferences affect payoffs at different exit values.
2. The impact of the liquidation multiple on the VC's returns.
3. How the VC's ownership percentage influences the distribution of returns.
4. The point at which the startup begins to receive returns (after the liquidation preference is satisfied).

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