On August 31st, 2012 Oculus closed a successful Kickstarter campaign raising \$2.4 million to develop their VR headset. Yesterday they announced a sale to Facebook for \$2B. Let's play the "What If" game and pretend their 9522 backers were investors – how much would their investments be worth today? Probably about 145x.

Assume that instead of preorders and donations, Oculus's Kickstarter campaign was for equity and raised a seed round entirely online. It's anyone's guess as to what those terms would look like – Oculus is a sexy hardware company that captures the imagination and it's easy to believe that VR will be a huge industry someday. I'm going to be conservative and assume founder-friendly terms for this hypothetical fundraise: a convertible note with a \$15m valuation cap and no discount or interest rate. You can read more about convertible notes here but back-of-the-envelope this is like saying Oculus was worth \$12 million with an exciting prototype and promising customer development:

After their crowdfunding campaign they went on to raise a \$16M Series A and then a \$75M Series B. I don't know what the valuation of those rounds were but as a general rule of thumb startups tend to give away 15-25% in venture rounds. I'm going to assume 15% for both, making their Series A and B pre-money valuation of about \$90m and \$425m, respectively.

Okay great. So in this universe what would've happened if you invested \$1,000 during the crowdfunding campaign?

Your \$1,000 would have started as "convertible debt" until it converted the day Oculus raised its Series A. Since the Series A valuation is above the \$15m cap on your note, your \$1k converts into equity as if the Series A valuation is \$15m instead of \$90m. Collectively all the seed investors own 16% (\$2.4m / \$15m) of the company before applying the Series A investment, so your \$1k investment converts to 0.00567% equity of Oculus after the Series A.