Question: Star Software was founded last year to develop software for gaming applications. The founder initially invested $1mil and received 8 million shares of stock. Star

Star Software was founded last year to develop software for gaming applications. The founder initially invested $1mil and received 8 million shares of stock. Star now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest 1.40million and wants to own 28% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 28% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)?

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!