Question: The seed investors are considering a $750,000 investment in the form of a convertible, which will convert at the lower of (1) 80% of the

The seed investors are considering a $750,000 investment in the form of a convertible, which will convert at the lower of (1) 80% of the price per share in the next equity financing or (2) a pre-money valuation of $5 million at the seed round of investment ❑The next equity financing is defined as a round of financing where at least $2 million is raised, including the conversion of the $750,000 convertible notes. ❑Assume there are 900,000 founder shares and a 10% issued and unallocated option pool of 100,000 shares

Series A investor takes 20% for a $4 million

Question: How will the ownership structure look like if there is no valuation cap?

Step by Step Solution

★★★★★

3.41 Rating (151 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Total Shares Before Series A Investment 10000... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

For Problem 4.4.10, use computer software and the Hazen-Williams equation instead of the DarcyWeisbach equation to solve for the flows. Problem 4.4.10 Using computer software, determine the flow rate...

Assume an investor writes a call option for 100 shares at a strike price of 30 for a premium of 5.75. This is a naked option. a. What would the gain or loss be if the stock closed at 26? b. What...

Assume that an investor buys 100 shares of stock at $50 per share, putting up a 60% margin. a. What is the debit balance in this transaction? b. How much equity capital must the investor provide to...

In Example 4.1.14, we showed how to price an option to buy one share of a stock at a particular price at a particular time in the future. This type of option is called a call option. A put option is...

1. Dividend-payout ratio is defined as: a. The dividend yield plus the capital gains yield. b. Dividends per share divided by earnings per share. c. Dividends per share divided by income per share....

The O.K. Railroad needs to raise $9.5 million for capital improvements. One possibility is a new preferred stock issue - 8 percent dividend, $100 par value - stock that would yield 9 percent to...

Listed are the equity sections of balance sheets for years 2011 and 2012 as reported by Mountain Air Ski Resorts, Inc. The overall value of stockholders equity has risen from $2,000,000 to...

You want to estimate the total intrinsic value of a large gas and electric utility company. This company has publicly traded stock and has been paying a regular dividend for many years. You decide...

Suppose Acap Corporation will pay a dividend of $2.85 per share at the end of this year and a dividend of $3.02 per share next year. You expect Acaps stock price to be $53.74 in two years. Assume...

Leverage and Stock Value ignoring taxes in problem 6, what is the price per share of equity under Plan I Plan II what principle is illustrated by your answers?

Ginos Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Ginos Restaurant Corporation, which had 100,000 shares of common stock outstanding, declared a 5-for-1...

Medical Center is starting a new lab test center on its third floor. The expected patient volume demands will generate $500,000 per year in revenues for the next five years. The new center will incur...

Express B = + + +rcos00+ 4 in cartesian and cylindrical co-ordinate at (-3, 4, 0) and (5, x/2,-2).

Which of the following actions by P&G would most likely result in the firm achieving differentiation parity with its main direct competitors? Group of answer choices Implementing a higher cost...

In a particular application involving fluid flow at a rate nz through a circular tube of length L and diameter D, the surface heat flux is known to have a sinusoidal variation with x, which is of the...

Slug flow is an idealized tube flow condition for which the velocity is assumed to be uniform over the entire tube cross section. For the case of laminar slug flow with a uniform surface heat flux,...

The surface of a 50-mm-diameter, thin-walled tube is maintained at 100C. In one case air is in cross flow over the tube with a temperature of 25C and a velocity of 30 m/s. In another case air is in...

Heated air required for a food-drying process is generated by passing ambient air at 20C through long, circular tubes (D = 50 mm, L = 5 m) housed in a steam condenser. Saturated steam at atmospheric...

A thin-walled, uninsulated O.3-m-diameter duct is used to route chilled air at 0.05 kg/s through the attic of a large commercial building. The attic air is at 37C, and natural circulation provides a...

What provides the centripetal force on a car rounding a curve on a level road? friction between the tires and the road gravity the torque applied to the steering wheel its brakes

Convertible Note Example: The seed investors are considering a $750,000 investment in the form of a convertible, which will convert at the lower of (1) 80% of the price per share in the next equity...

1. Seed investors are considering $360,000 investment in the form of a convertible note, which will convert av the lower of a. 80% of the price per share in the next equity nancing, or lo. A premonev...

Round A Round B Round C Round D Round E Investment Pre-money Valuation Post-money valuation Share Price Number of Shares Ownership Value Number of Shares Ownership Value Number of Shares Ownership...

Assume, for the next four problems that A-round investors believe that the terminal value of the company will be $50 million in 5 years and that the investors believe the risk warrants a 50% discount...

Any kind of help is greatly appreciated :)))))))) A start-up company called "COMM387" is raising it's Series A round at a $12M pre-money valuation and a $10 price per share. The amount raised in the...