LoyolaEX is a startup that has the following ownership structure. All current shareholders hold common...
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LoyolaEX is a startup that has the following ownership structure. All current shareholders hold common shares.
Founders: 200,000 shares
Angels: 100,000 shares
Employees: 100,000 shares
A VC offers to invest $1 million for a 20% equity stake in the startup. It also requires for all standard preferred shareholder rights that include a 2X liquidation preference right.
How many new shares will be issued to the VC? (1.5 point)
What is the new ownership percentage for each group of shareholders after the investment?
(1.5 point)
What is the pre- and post-money valuation for this company? (1.5 point)
Two years went by and LoyolaEX receives an acquisition proposal that offers $12 million for the startup.
How much would each group of investors get paid if there were no cap on its participation right? (Note 2X liquidation preference right.) (1.5 point)
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