Tom invests $5000 in a tech startup. Over 3 years, the investment grows by 40% in the first year, 25% in the second, and loses 20% in the third. What is the value of the investment at the end of year 3?

Sun, 03 May 2026 20:44:58 +0000

**What Happens When You Invest $5,000 in a Tech Startup Over Three Years?**
A growing number of investors are exploring early-stage tech opportunities, especially with shifting market interest in innovation and post-pandemic digital adoption. One common inquiry among curious, results-oriented readers is: What’s the real value of a $5,000 investment in a tech startup after three years with fluctuating year-over-year returns? Understanding the math behind these timelines helps inform smarter financial decisions—especially when capital is in performance-sensitive ventures. When Tom invests $5,000 in a tech startup, the journey of growth isn’t linear. Over the first year, the investment gains 40%, reflecting strong early market confidence and scaling potential. The second year builds on that momentum, delivering a 25% increase—though still within a competitive landscape. However, in the third year, a 20% decline reflects the volatility often found in early-stage ventures, influenced by market corrections, competitive pressures, or shifting consumer demand. Calculating Tom’s investment at the end of year 3 requires compound movement. Starting at $5,000:
- After Year 1: $5,000 × 1.40 = $7,000
- After Year 2: $7,000 × 1.25 = $8,750
- After Year 3: $8,750 × 0.80 = $7,000 Thus, despite early gains, the investment returns to $7,000 by year 3—a reminder that volatility remains a key factor in startup exposure.