LoyolaEX is a startup that has the following ownership structure. All current shareholders hold common shares. Founders:
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- LoyolaEX is a startup that has the following ownership structure. All current shareholders hold common shares.
- Founders: 200,000 shares
- Angels: 100,000 shares
- Employees: 100,000 shares
- A VC offers to invest $1 million for a 20% equity stake in the startup. It also requires for all standard preferred shareholder rights that include a 2X liquidation preference right.
- How many new shares will be issued to the VC?
- What is the new ownership percentage for each group of shareholders after the investment?
- What is the pre- and post-money valuation for this company?
- Two years went by and LoyolaEX receives an acquisition proposal that offers $12 million for the startup.
- How much would each group of investors get paid if there were no cap on its participation right?
Related Book For
Advanced Financial Accounting
ISBN: 978-0078025624
10th edition
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
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