If my friend gives me a thousand dollars for 0.0001% of my "company", am I technically a Billionaire now?

  • 10
    An actual case of this: signalvnoise.com/posts/…
    – ceejayoz
    Aug 12, 2021 at 14:12
  • 2
    @ceejayoz that whole article reads as an onion piece.
    – CGCampbell
    Aug 12, 2021 at 14:31
  • 8
    Are you asking whether you can simply go around telling people you're a billionaire? Or is this for some other financial purpose... like securing a loan, fudging your taxes, etc? Telling your grandma that you're now a billionaire has few consequences. Telling your bank the same is wildly different. To whom do you intend to declare yourself a billionaire?
    – J...
    Aug 12, 2021 at 16:41
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    if you only own 99.9999% of your $1B company, you're not technically a billionaire... buy those shares back :)
    – economy
    Aug 12, 2021 at 17:25
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    @TylerH The unspoken assumption here is that by selling a tiny fraction of the company's shares for the given sum that the remaining shares would, by extension, have the same valuation. Elon Musk's or Jeff Bezos' net worth, for example, is largely tied up in equity, not cash; it assumes they can sell their shares in their own companies at some valuation around the market rate. OP is asking if their trivial transaction would confer the same valuation on their remaining "unsold" shares.
    – J...
    Aug 13, 2021 at 17:42

9 Answers 9


The unspoken point behind your question is that people often talk about the value of companies in terms of their market capitalisation which is the price of one share times the number of shares. This methodology has obvious flaws - if all the holders wanted to sell at once the price would plummet, and if someone tried to buy all the shares at once the price would go up a lot. So there's no sense in which the company can actually be bought or sold for that valuation.

On the other hand, for publicly traded companies, the price of one share is at least set by some sort of equilibrium between market participants and you can generally expect people to sell when it goes too high and buy when it gets too low, based on some assessment they each make of the underlying value. So people will often consider that even a large block of shares is worth the current market price, and hence that it forms part of the net worth of someone who owns that block of shares.

The phenomenon that arose this year (2021) of so-called "meme" stocks like Gamestop are a good counter-example. Many of the market participants aren't necessarily acting on a rational assessment of the company's financial prospects, and hence many people would question the current price as a basis for an accurate valuation. But still, there is a market and one could probably sell a reasonable number of shares at the "current" price.

Private companies funded by venture capitalists are another good grey area: they are often valued based on the last funding round. Very uncertain and risky, but someone has made a rational assessment of the value at some point in time.

Your own hypothetical example is on much shakier ground still: no-one who is independent of you and acting rationally is likely to actually think what you sell is worth $1000. And anyone trying to assess the value independently is going to realise that. So in practice it's unlikely you'll actually be able to convince someone you are a billionaire on that basis.

  • 8
    More so than not convincing anyone you're a billionaire on that basis, you simply aren't. I think a good test, if you aren't looking to sell your ownership in the company, is what value would a lending institution assign to those shares as collateral for a loan.
    – TCooper
    Aug 11, 2021 at 21:19
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    @GS-ApologisetoMonica a reasonable basis, sure, but are you a billionaire if you can't spend the money? My point is that if a financial institution will lend you x dollars with that as the collateral, there's a concrete dollar value assigned to it. Until then, or until it's sold, it's pure speculation/has no actual value. It's just paperwork. If said company goes bankrupt two months later due to executive waste and public scandal - the valuation from two months ago means nothing. If it was used as collateral though, the loan is still valid (the bank just fired the underwriter though)
    – TCooper
    Aug 11, 2021 at 21:30
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    @TCooper agreed. It all defines how you define it. A newspaper saying you're a billionaire might be another metric. Aug 11, 2021 at 22:18
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    @TCooper That makes me wonder how many of the current millionaires/billionaires would be considered such? i.e. how many billionaires have a billion dollars (or whatever currency) to spend.
    – CGCampbell
    Aug 12, 2021 at 14:22
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    @CGCampbell You don't have to have a billion to spend to be a billionaire, you have to have a billion in assets that have some fundamental value, assigned either by other's willingness to purchase that asset/portions of it, or a financial institution willing to loan against it as collateral. Without one of those things, the asset's value isn't defined.
    – TCooper
    Aug 12, 2021 at 22:04

The term "billionaire" is not a legal or technical term; it can mean whatever you want it to mean. Most people would define it as someone who owns at least $1 billion in assets.

If you own a company, and you convince one person to purchase 0.0001% of the company for $1000, you could argue that your company is worth $1 billion. Sure, call yourself a billionaire. :) However, that value is only an instantaneous value at that moment. Your company is only worth what people will pay for it now. If you don't have another person lined up to buy another share at $1000, then your company isn't really worth $1 billion.

  • 26
    Indeed, a recent President called himself a billionaire despite some reports saying he has a negative net worth.
    – Barmar
    Aug 12, 2021 at 13:35
  • In other words, the purchase in question implies a valuation of the company but good luck buying a yacht based on that.
    – JimmyJames
    Aug 12, 2021 at 14:59
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    A single transaction for less than the total shares does not even imply that all the shares are worth that, especially in an extremely illiquid market. So I would say that a single share sale does not at all imply that the company is worth $1 billion. This can easily be chalked up to "outlier demand" which is not easily reproduced. Repeat the trick 10,000x and I'll change my mind. Aug 12, 2021 at 18:33
  • 1
    Guess it should actually be "If you don't have a MILLION persons lined up to buy another share at $1000".
    – MaxD
    Aug 12, 2021 at 19:11
  • 2
    You don't need one other person lined up -- you need one million. Aug 13, 2021 at 13:51

If my friend gives me a thousand dollars for 0.0001% of my "company", am I technically a Billionaire now?

$1000 is definitely 0.0001% of $1Bn. You'd be a billionaire IF:

  1. you own the other 99.9999% of the company, and
  2. have the $1000 from your friend and
  3. other people would pay -- and continue to pay -- just as much as your friend for shares. (If the next guy only wants to pay $100 for that 0.0001%, then the company is only worth $100M; this is the hazard of thinly-traded stocks.)

Step 3 is most important; otherwise, it's an exercise in vanity.

  • 3
    #1 is missing a 9. Also, why is #2 there? If the wealth is based on the company, why would having "$1000 laying around" matter?
    – nanoman
    Aug 11, 2021 at 19:24
  • Thank you so much, I have one last question, I mean like we have seen so many highly valued companies (from private investments) completely flop in the public market, ie. people don't agree with that valuation. So, I am kind of confused about that 3rd point, exactly how many people would need to agree with that valuation for me to technically be a billionaire? Aug 11, 2021 at 19:34
  • 2
    Just one, if that person would buy out your share for $1 billion. Accurate valuations based on small transactions only occur on an open market where such small transaction occur regularly over a period of time.
    – chepner
    Aug 11, 2021 at 19:56
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    @nanoman you need the other "$1000 laying around" because your fraction of the company is worth slightly less than $1Bn.
    – RonJohn
    Aug 11, 2021 at 20:07
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    @Aditya_math the valuation of a company based on share price is point in time. Right now, you might be a billionaire, but tomorrow you might "only" be worth $500M if tomorrow people offer you $500 for 0.0001% of your company. This is a perfect example of the volatility of thinly traded shares.
    – RonJohn
    Aug 11, 2021 at 20:11

tl;dr Someone has a strong claim to billionaire-status if they have immediate ownership/control of at least a billion-USD and no debts/liabilities. Others might claim billionaire-status with various caveats. It'd seem reasonable to reject sufficiently unreasonable arguments.

Strict definition of billionaire and various approximations.

A reasonable definition of billionaire would be someone who could quickly-and-reliably produce at least 1-billion USD in cash while holding no debts/liabilities and breaking no laws.

The further someone's removed from meeting that definition, the weaker their claim to being a billionaire.

Examples of approximations of billionaires:

  1. Very clearly billionaires:

    • Alice has no debts and owns a parcel of land with a vault containing 10-billion USD in cash, with adequate security such that their ownership of that property seems secure.
  2. Pretty much billionaires:

    • Alice has no debts and a modest home. Alice is owed 10-billion USD by the US government, with strong expectation for delivery within 1 month.

    • Bob has no debts, 0.5-billion USD in cash, and a house that could probably sell for about 0.75-billion within a few months.

    • Charlie has no debts and 0.999-billion USD in cash.

    • Dave has no debts and a house that could probably sell for 1.5-billion USD within a few months.

    • Eliza has 2-billion USD in cash, though is currently liable for an amount that might reach up to about 1-billion USD.

  3. Arguably billionaires:

    • Alice owns 50% of a publicly-traded company with a market-cap of 2-billion USD, projected for a stock-price that might be inflated.

    • Bob fully owns rights to something with royalties projected to be about 1-billion USD over the next 10-years, after time-discounting.

    • Charlie owns 1.25-billion USD in cash, but has 0.5-billion USD in liabilities due in a year.

    • Dave has no debts and 0.95-billion USD in cash.

    • Eliza has no debts and owns a cache of historical artwork appraised to 10-billion USD.

  4. Probably not billionaires:

    • Alice has 1-billion USD in cash, but also 0.5-billion USD in debts.

    • Bob owns 1-billion USD in cash and has no debts, though they hid half of their cash in a safe buried underground in a location that was forgotten.

    • Charlie owns 1-billion USD of an asset, where the volume of that asset exceeds market-demand for it over 10 years.

    • Dave has no debts, but is owed 1-billion USD by creditors who're considered likely to default.

  5. Very weak claims:

    • Alice owns 1-billion USD of an asset, as assessed by a very dubious source.

    • Bob owns 1-billion USD in cash that they then loaded onto a rocket and blasted on a course to Pluto.

    • Charlie invested 1-million-USD in a scheme advertised to them via an unsolicited telemarketing call, with an assurance of a 1000-fold return within a month.

    • After reading about impending colonization of Mars, Dave purchased half of the real-estate on Mars from a website claiming to sell real-estate on Mars 4 CHEEP.

    • Eliza has just wrote a 25-word poem and plans to sell copies of it for 1-USD each to everyone who can access the internet.

Anyway, the point's that folks might make claims about billionaire-status based on various caveats, assumptions, and approximations. As such it's kind of a fuzzy-qualifier when not meant strictly.

Is someone a billionaire if they can sell a small portion of an asset for a similar portion of a billion-USD?

If someone claims billionaire-status on the basis of having sold x% of an asset for x% of a billion-USD, then presumably they're arguing that they could sell the remainder of that asset for the remainder of a billion-USD.

So, how plausible do you find that?

Discussion: Why net-worth isn't necessarily simple.

A naive definition of billionaire might be: someone who has a net-worth of at least 1 billion USD.

The issue's that net-worth isn't necessarily a simple issue. Rather, we might consider assets with various risks, time-delays, liabilities, etc., meaning that if someone wanted to assign a specific numeric-value to their net-worth, it'd tend to be pretty subjective.

So for the question:

If my friend gives me a thousand dollars for 0.0001% of my "company", am I technically a Billionaire now?

It's not really a technical issue. Rather, folks might accept the claim that you're a billionaire to the extent that they believe that the prior trade plausibly established the value of the company as being at least about that. If they don't believe that that assessment follows, then presumably they wouldn't consider you a billionaire.

  • Wow, this is a really well written answer, Thank you! I do have a question tho, so like Jeff Bezos prolly won't be able to produce 100B $ in cash quickly, cos if he tried, the stock prices would plummet and many other things, so can he not be called a 100 billionaire? (or replace jeff with some other person who owns stock valued at a billion in some company) Aug 12, 2021 at 12:40
  • 2
    @Aditya_math: Yeah, it'd probably be a stretch to say that someone whose wealth is primarily in an asset that can't be dumped at the marginal rate has a net-worth based on the marginal rate that they can't actually access.
    – Nat
    Aug 12, 2021 at 12:44
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    @Aditya_math: This story about Elon Musk being told that he was ranked the richest person might be a good example.
    – Nat
    Aug 12, 2021 at 12:46
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    @Aditya_math: "so like Jeff Bezos prolly can't produce $100B in cash quickly, cos the stock prices would plummet?" This is the same as the "Charlie has no debts and $0.999B USD in cash" case. Charlie cannot produce $1B by cashing out his savings; but he can use those savings as collateral for an easy and legal bank loan of $1B cash, which he'll repay to the bank over time with interest. Bezos can use his securities as collateral on a bank loan in exactly the same way: he's a good credit risk. See also github.com/MKorostoff/1-pixel-wealth/blob/master/… Aug 12, 2021 at 20:21

Other answers explain nicely why you (as a person) aren't a billionnaire, at least solely on this basis.

I will add a perspective from the point of view of company valuation, i.e. how much is a company worth (with who owns what part and what that means about their personal net worth an incidental consequence.)

A company is worth what someone would actually pay for it. Valuation is an exercise in estimating that, based on whatever evidence is available.

For a publicly-held company, all or most of whose shares are publicly traded, with decent liquidity, extrapolating from the share price of recently traded shares is pretty good evidence (though not perfect, as other answers have discussed). If you believe in some form of the efficient market hypothesis, that share price should not materially deviate from the best average belief of market participants as to value of the whole company.

For a privately held company, extrapolating from transactions for a fraction of the company is more fraught, since there is little liquidity, less information transparency, and such transactions occur only occasionally and so may reflect a materially different situation.

As a result, such "evidence" is of some but quite limited value, even if it reflects meaningful investments by people who can be trusted to have done some amount of due diligence. This frequently happens with startups, where say the founders may have raised, say $2 million in initial capital for a 20% stake of the company, but it's only on paper that might mean the company is actually worth $10 million. Especially if that $2 million has been spent and the idea is going nowhere, and the company is worth (close to) $0. More complex ownership structures make this more complicated, but the idea holds.

Where the investment is for a minimal stake, not an arm's length transaction, and may be intended to pump up the (apparent) value of the company, that "evidence" is of no value whatsoever.

  • Exactly. The original poster would not make the Forbes World's Billionaires list because the valuation of the company would be far less than a billion. "Methodology: ... We value a variety of assets, including private companies, real estate, art and more. We don’t pretend to know each billionaire’s private balance sheet (though some provide it). When documentation isn’t supplied or available, we discount fortunes." forbes.com/billionaires Aug 13, 2021 at 20:36

No. You would need a net worth (assets minus liabilities) of $1 billion to be a billionaire. So unless you own the remaining 99.9999% and it is worth $999,998,000, then no. There are many ways to valuate a business but only a few that are accepted. In short, it's worth what it will sell for.

A different example: You and I buy a house jointly for $500k, you invest $499k for 99.9999% ownership and I invest $1k for 0.0001%.

Are you a billionaire? No.

Ignoring any other assets or liabilities, you are worth $499k.


Yes, if the market agrees with your friend.

No, if the market don't agree with your friend.


If that's all the equity you have, then you're not even a thousandaire, since your interest in the company is 99.9999% of a company worth $1,000, and your friend's equity holding in your company is just a tenth of a penny.

  • wait I'm sorry but I am confused, surely a lot of tech companies sell some part of their equity for a high valuation right, for instance if I raised 50 million for 1% equity, that would value my company at 5 billion, so my net worth would be 5 billion right? Aug 11, 2021 at 18:59
  • 1
    You have it backwards. Someone would give you $50 million for 1% equity because they independently believe that your company is worth $5 billion. The investment is based on the valuation, rather than the investment determining the valuation.
    – chepner
    Aug 11, 2021 at 19:55
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    @Aditya_math if you alone own the other 95% of the company.
    – RonJohn
    Aug 11, 2021 at 20:04
  • @chepner There is absolutely no requirement that an investment must be made based on perceived or actual market value. My mom could give me $10000 for 10% interest to start a business while believing it will fail and be worth nothing. Motivation for investment is heterogenous, and people bid below or above valuation all the time for a variety of reasons. The actual wealth of equity holder is not based on the value of ownership, which is speculative, but what's on the balance sheet, of course including expected future earnings and intangible assets.
    – seamux
    Aug 11, 2021 at 20:11
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    @seamux: IIUC, when you say "...a company worth $1,000," you're using the word "worth" to mean "with assets totaling," is that right? The company has $1000 in its accounts because it just received $1000 from the friend; the company has no other assets (e.g. real estate, tools, cars); therefore its total capital is $1000; therefore it is worth $1000. Right? This logic is sound, if you agree that the words worth and assets mean the same thing, and if you ignore all possibility of "intangible assets" or "social capital" or whatever persuaded the friend to buy shares in the first place. Aug 12, 2021 at 20:30

The answer is completely trivial,

No, because there is no liquidity.

I might say it's surprising the other answers are so long.

  • 1
    You assert that there's no liquidity without evidence. (If it's worth a billion dollars, then someone will want to buy at least a fraction of it. That's why my answer says, "other people would pay -- and continue to pay -- just as much as your friend".)
    – RonJohn
    Aug 13, 2021 at 15:20
  • "Evidence" is not related; the very point of the question is that it is a "company" (in "air quotes") - the whole thing the OP is asking is what's the company "worth" in the case of only the one sale.
    – Fattie
    Aug 14, 2021 at 16:12
  • ie, "J..."'s comment ("The unspoken assumption ...") perfectly sums up this novelty question.
    – Fattie
    Aug 14, 2021 at 16:12

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