Assuming a $24 million exit, Calculate Red Baron Venture Partner's common share proceeds using the Red Baron term sheet (Exhibit):  

 

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Comparison of Term Sheets Top Gun Term Pre-money Valuation Investor Equity Share Founders' Equity (diluted) Employee Pool Investment Amount Split Round Security Type Liquidation preference Participation ● Dividends Automatic Conversion Conversion Rate Anti-dilution Board Composition Founder Vesting Pay-to-Play Fees for Diligence $5M 48.5% 26.48% 25% $4M No Convertible Preferred 1X No 8% annual, pari passu $40M offer price Pre-$ value $300M >50% preferred appr 1:1 Weighted Average 1 of 3 chosen by investors Not addressed No Up to $30,000 Red Barron $6M 53.3% 31.7% 15% $6M Yes, 2nd VC investor Convertible Participating Pref'ed 1X Capped at 2.5X As converted $30M offer price 5X original purchase >66% preferred appr 1:1 Full Ratchet 2 of 3 chosen by investors 4 years Yes Up to $30,000 Preference Red Barron Top Gun Red Baron Red Baron Top Gun Top Gun Red Baron Equal Top Gun Top Gun Top Gun Red Baron Top Gun Comparison of Term Sheets Top Gun Term Pre-money Valuation Investor Equity Share Founders' Equity (diluted) Employee Pool Investment Amount Split Round Security Type Liquidation preference Participation ● Dividends Automatic Conversion Conversion Rate Anti-dilution Board Composition Founder Vesting Pay-to-Play Fees for Diligence $5M 48.5% 26.48% 25% $4M No Convertible Preferred 1X No 8% annual, pari passu $40M offer price Pre-$ value $300M >50% preferred appr 1:1 Weighted Average 1 of 3 chosen by investors Not addressed No Up to $30,000 Red Barron $6M 53.3% 31.7% 15% $6M Yes, 2nd VC investor Convertible Participating Pref'ed 1X Capped at 2.5X As converted $30M offer price 5X original purchase >66% preferred appr 1:1 Full Ratchet 2 of 3 chosen by investors 4 years Yes Up to $30,000 Preference Red Barron Top Gun Red Baron Red Baron Top Gun Top Gun Red Baron Equal Top Gun Top Gun Top Gun Red Baron Top Gun

Answer rating: 100% (QA)

To calculate Red Baron Venture Partners common share proceeds we need to consider the terms outlined ... View the full answer