1. How large does an exit have to be to justify a $10M investment for a 28% ownership if we expect to wait 5-7 years for an exit and our current ownership will be diluted 50% before an exit occurs if the probability of project success is 20% and the expected return that limited partners require is 15%?
2. Consider a company founded with 1m shares of common equity, split amongst the founders. A year later the company raises $5M of Series A funding at a $10M pre-money valuation. After the money has gone into the firm, they establish an option pool of 20% of post-money shares outstanding. Approximately how many options are in the option pool?
3. Imagine a Series A investor who has standard weighted average anti-dilution protection. Assume they have paid $100 for 25 shares. The series B investor puts in $100 and receives 50 shares. How many additional shares would be allocated to the Series A investor if the weighted average anti-dilution were honored?
4. Imagine an angel investor who invests $100,000 in a convertible note that pays 8% simple interest annually. Exactly one year later, the firm receives Series A financing at $2/share. If the angel investor receives a 20% discount to the Series A round, how many shares would their investment convert to?
5. Imagine an angel investor who invests $100,000 in a convertible note that pays 8% simple interest annually. Exactly one year later, the firm receives Series A financing at $2/share. If the angel investor receives no discount to the Series A round, how many shares would their investment convert to?