Assume VC-1 crafted its offer using the Venture Capital Method of valuation assuming 1) that it wants a 3.0x return of invested capital and 2) that the exit valuation of DDC will be $100MM, and 3) that its initial ownership % will be diluted by 25% prior to exit. What must be VC-1's initial Post$ ownership %? (You should ignore any prior assumptions about Pre$ or Post$ valuation.)

	A.	20.0%
	B.	16.6%
	C.	12.3%
	D.	25.0%
	E.	15.0%

The liquidation preference in the term sheet provides that the CPS-A has the right to demand a 3X return before any value is given to common stock. Regardless of any prior calculations or assumptions, assume the $5MM investment in CPS-A shares purchased 1,500,000 shares. Assuming the firm is sold for $75MM and all investors are rational, what will be the per-share recovery to common stock.

	A.	11.5
	B.	12.5
	C.	12.0
	D.	11.5
	E.	10.0

DDC is growing ahead of plan and needs more capital to expand. DDC is soliciting term sheets from several Venture Lending Banks/Funds. Why might DDC prefer to take out a loan rather than raise another round of VC equity financing?

	A.	The loan will have a lower interest rate than the as-declared dividend rate on the common stock.
	B.	The loan will have a floating interest rate which helps hedge the firm against inflation risk.
	C.	The loan will have covenants that require DDC manage its business prudently.
	D.	The loan will not need to be repaid for seven years and most VC's like to exit within five years.
	E.	The loan will protect employee ownership interests under the existing option plan.