VV Ventures is a VC firm that is considering an investment in Start-Up, Inc (SU).  VV is projecting SU's annual sales to grow from the current level of $8,000,000 to $52,000,000 over the next 3 years. If SU's publicly-traded peers are trading at 8X sales.

What is the minimum stake of SU that VV should request in exchange for $10 million, assuming that VV anticipates dilution of 20% in the next round of VC funding and an additional 15% at the IPO (which is anticipated in 3 years)?

Answer rating: 100% (QA)

Current sales of SU 8000000 Projected sales of SU in 3 years 52000000 Valuation multiple of peers 8X ... View the full answer