Starware Software was founded last year to develop software for gaming applications. The founder initially invested

$1,000,000

and received

11

million shares of stock. Starware 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

$1.60

million 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)?