Rampant Unicorn Inc., completed its series A fundraising round 1 year ago. At that time, Rampant had 15M shares of common stock and 10M series A convertible preferred. The 10M series A shares are owned by the VC firm Capricorn Partners, and were issued at $5 per share when issued and have a 1 to 1 conversion into common.

Now, the company is issuing series B shares to a new VC syndicate. Rampant unfortunately has not done well over the last year, and now needs to raise an additional $100M during this current fundraising round. The series B will also be convertible 1 to 1 into common. The new syndicate estimates the post-money valuation to be $130M.

1. IF Capricorn Partners has no anti-dilution protection, how many series B shares should the new syndicate demand for the $100M investment?
2. IF Capricorn Partners has full-ratchet anti-dilution protection, how many series B shares should the new syndicate demand for the $100M investment?
3. IF Capricorn Partners has broad-based weighted average anti-dilution protection, how many series B shares should the new syndicate demand for the $100M investment?

Answer rating: 100% (QA)

A When no anti dilution protection To ensure stability of income of Capricorn ... View the full answer