Quote:
Originally Posted by Fitzcat
If I understand the PTP system, what you mean by 70% w/ no makeup is that the backer gets 70% and you get 30%. This is equivalent to 1/.7 = 1.428..., ie. 42% markup.
That is, a backer could buy 70% of you by giving you 1.42 * 70% of the buyin. Since 1.42 * .7 = 1, he'd be paying your full buyin, but you'd still have 30% of yourself.
This is not accurate because of the distribution of winnings.
Example A: Player sells ten $1000 packages at 70/30.
9 packages he cashes for exactly $500
1 package he cashes for $10,500
He cashed for $15k with a 50% ROI
His investors get (500*9 + 1000 + 9500*.7) = $12,150
Example B: Player sells ten $1000 packages at 70/30.
10 packages he cashes for exactly $1500
He cashed for $15k with a 50% ROI
His investors get (1000*10 + 500*10*.7) = $13,500
Example C: Player sells ten $1000 packages at 42% markup. He sells 70% of his action
9 packages he cashes for exactly $500
1 package he cashes for $10,500
He cashed for $15k with a 50% ROI
His investors paid $9,940
His investors get (15,000*.7) = $10,500
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Investors of A got 21.5% ROI
Investors of B got 35% ROI
Investors of C got ~9% ROI