At the beginning of your previous financing round, your company was valued at $600,000, which was based on 200,000 shares outstanding. You received additional investment in the amount of $400,000 from an outside investor. In exchange for that investment, they received convertible preferred shares that have a 1.5x liquidation preference, and a 3% cumulative preferred dividend with dividends deferred until exit. These shares also had a full-ratchet anti-dilution provision.

Unfortunately, the company has experienced delays and you are now forced to do a down round, where the new investors are willing to provide $150,000 in additional funding in exchange for 60,000 new common shares.

If the anti-dilution provision is invoked for the Series A round preferred investors, what is the number of shares outstanding on fully diluted, "as converted" basis?

Answer rating: 100% (QA)

First lets calculate the number of shares issued to the outside investor in the Series A round Amoun... View the full answer