Question: Please help I will upvote if correct A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco.

Please help I will upvote if correct Please help I will upvote if correct A fictitious VC firm, EBV,

A fictitious VC firm, EBV, that is considering a series A investment in a start-up company named Newco. The terms specify that EBV invests $5 million for 5M shares into Newco, which currently has 10M shares allotted to employees and founders. Security structure is as follows: First pay [one] times the Original Purchase Price on each share of Series A Preferred. Thereafter, the Series A Preferred participates with the Common Stock pro rata on an as-converted basis. Each share of Series A Preferred (PCP) will automatically be converted into Common Stock with QPO at \$5 per share. if the exit is $72, how much is the distribution to the VC? $32M $27.3 $24M $10.7M

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
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 Finance Questions!