You founded your own firm three years ago. You initially contributed $200,000 of your ownmoney and...

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You founded your own firm three years ago. You initiallycontributed $200,000 of your ownmoney and in return you received 2million shares of stock . You also sold an additional 1 millionshares of stock to angel investors. Now, you are considering asecond round raising capital from a venture capital firm. Thisventure capital firm would invest $5 million and would receive 2million newly issued shares in return.
a.What is the price per share of this funding round?
b. What is the value of the whole firm afterthis investment (thepost-money valuation)?
c. Assuming that this is the venture capitalist's firstinvestment in your firm, what percentage of the firm will theventure capitalist own? What percentage of the firm will youown
after this investment?
d.How much money will you gain from founding this firm afterthis round of financing? Ignore time value of money when you answerthis question.

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4.4 Ratings (656 Votes)

aCompute the price per share of thefunding round using the equation as followsHence the price per shareof funding round is 250bCompute the total number See Answer

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You founded your own firm three years ago. You initiallycontributed $200,000 of your ownmoney and in return you received 2million shares of stock . You also sold an additional 1 millionshares of stock to angel investors. Now, you are considering asecond round raising capital from a venture capital firm. Thisventure capital firm would invest $5 million and would receive 2million newly issued shares in return.a.What is the price per share of this funding round?b. What is the value of the whole firm afterthis investment (thepost-money valuation)?c. Assuming that this is the venture capitalist's firstinvestment in your firm, what percentage of the firm will theventure capitalist own? What percentage of the firm will youownafter this investment?d.How much money will you gain from founding this firm afterthis round of financing? Ignore time value of money when you answerthis question.