Question: 13. The Swedish start-up company Neo Technology develops a database management sys- tem. The company is seeking Series A round VC financing to expand the

13. The Swedish start-up company Neo Technology develops a database management sys- tem. The company is seeking Series A round VC financing to expand the firm. You are advising a VC fund that is considering this investment. You estimate the proba- bility of a successful sale or IPO in five years to be fifty-fifty. The expected retention percentage is 50%. Current revenues for the venture are 2.5 million Swedish Krona (SEK) annually, and you expect them to increase by 50% every year for five years until a successful exit. You believe that this start-up company is most comparable to Oracle (NASDAQ: ORCL), a public firm in the U.S. currently trading at a P/S ratio of about 5.0x. Neo currently has 10 million shares outstanding (on a fully diluted basis), and the VC is offered 2 million new shares for an investment of 5 million SEK. Using the Standard VC Valuation Method, do your recommend an investment? Please show each step of your calculations. 13. The Swedish start-up company Neo Technology develops a database management sys- tem. The company is seeking Series A round VC financing to expand the firm. You are advising a VC fund that is considering this investment. You estimate the proba- bility of a successful sale or IPO in five years to be fifty-fifty. The expected retention percentage is 50%. Current revenues for the venture are 2.5 million Swedish Krona (SEK) annually, and you expect them to increase by 50% every year for five years until a successful exit. You believe that this start-up company is most comparable to Oracle (NASDAQ: ORCL), a public firm in the U.S. currently trading at a P/S ratio of about 5.0x. Neo currently has 10 million shares outstanding (on a fully diluted basis), and the VC is offered 2 million new shares for an investment of 5 million SEK. Using the Standard VC Valuation Method, do your recommend an investment? Please show each step of your calculations
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