You are seeking $1.5 million from a venture capitalist to finance the launch of your on-line financial search engine. You and the VC agree that your venture is currently worth $3 million.
When the company goes public in an IPO in five years, it is expected to have a market capitalization of $20 million.
Given the company's stage of development, the VC requires a 50 percent return on investment. What fraction of the firm will the VC receive in exchange for its $1.5 million investment in your company?