Suppose Series A investor invested $6M and holds PCPC. The following is the description of the PCPC:
"First pay one time the Original Purchase Price on each share of Series A Preferred.  Thereafter, Series A Preferred participates with Common Stock pro rata on an as-converted basis until the holders of Series A Preferred receive an aggregate of 5 times the Original Purchase Price."

			Pre-Series A			Post-Series A
Security			# Shares	%		# Shares	%
Common-Founders			15,000,000	83.3%		15,000,000	62.5%
Common-Employee Stock Pool			3,000,000	16.7%		3,000,000	12.5%
Issued			600,000	3.3%		600,000	2.5%
Unissued			2,400,000	13.3%		2,400,000	10.0%
Series A Preferred			0	0.0%		6,000,000	25.0%
Total			18,000,000	100.0%		24,000,000	100.0%

1).  Show coordinates of all inflection points starting from (0,0) and slope in the exit diagram. (If available, submit exit diagram showing all coordinates in X-Y axis and slope.)
2). The company is acquired by its competitor and Series A investor exited from the portfolio company with the valuation of portfolio company at $96M. How much does Series A investor claim?

Answer rating: 100% (QA)

To calculate the amount Series A investor claims upon exit we need to follow the liquidation prefere... View the full answer