The application for mobile games was created last year by PEPSICO App. At first, the entrepreneur contributed 700,000 dollars and received 8 million stock options. Currently, the second round of money has to be raised and a venture capitalist who wants to invest is discovered. At the end of the investment, this venture capitalist will invest 1,000,000 and expects to own 12 percent ownership of the business

questions:

a) How many stocks must the venture capitalist get at 12% of the business? What is this funding round's implied per share price?

b) After this acquisition (the postmoney evaluation), what will the valuation of the whole business be?

Answer rating: 100% (QA)

a To determine the number of stocks the venture capitalist must receive at a 12 ownership stake we can set up the following equation Venture Capitalist Ownership Percentage Venture Capitalist Stock Op... View the full answer