Question: These are the cap tables for a startup AFTER two rounds of financing (After Series A and Series B) by a single VC investor: Series
These are the cap tables for a startup AFTER two rounds of financing (After Series A and Series B) by a single VC investor:
| Series A January 2014 | Series B January 2016 | |||||
| shares | % | value | shares | % | value | |
| Founder | 6,300,000 | 63% | $6,300,000 | 6,300,000 | 52.5% | $25,200,000 |
| Investor | 3,000,000 | 30% | $3,000,000 | 5,000,000 | 41.7% | $20,000,000 |
| Options | 700,000 | 7% | $700,000 | 700,000 | 5.8% | $2,800,000 |
| Total | 10,000,000 | 100% | $10,000,000 | 12,000,000 | 100% | $48,000,000 |
EXIT: By June 2018, the company shows a net annual profit of $40M and is acquired for a multiple of 6 times profit. Employees have a 4 year linear vesting schedule with options vesting on an annual basis (shares vest once a year at the employee's employment anniversary date).
Based on this cap table, how much profit would an employee who had 4000 option shares granted to them at the time the Series A Round closes make after the exit described above (before taxes)? The strike price is equal to the Series A share price. Round up or down to the nearest dollar.
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