You manage a multi-stage VC fund conducting due diligence on an pharmaceutical start-up. The required rate...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You manage a multi-stage VC fund conducting due diligence on an pharmaceutical start-up. The required rate of return is 33%. You will participate in an A round initially, a B round in four years, and a C round in seven years. Required: a. In the A round, what equity position do you need to justify a $1,035,000 investment if the pre-round valuation of the firm is $2,535,000? b. In the B round, an additional $4,500,000 will be raised from a syndication of VCs including your firm. To maintain your equity position, how much must you contribute to the B round of financing? Assume the firm is valued at cost. c. In the C round, an additional $10,350,000 will be raised from the same syndication of VCs. If you wish to continue to maintain the same equity position, how much will you need to invest in this round? Assume the firm continues to be valued at cost. d. If the firm is acquired for $90.350,000 in the 9th year, is your required rate of return satisfied? You manage a multi-stage VC fund conducting due diligence on an pharmaceutical start-up. The required rate of return is 33%. You will participate in an A round initially, a B round in four years, and a C round in seven years. Required: a. In the A round, what equity position do you need to justify a $1,035,000 investment if the pre-round valuation of the firm is $2,535,000? b. In the B round, an additional $4,500,000 will be raised from a syndication of VCs including your firm. To maintain your equity position, how much must you contribute to the B round of financing? Assume the firm is valued at cost. c. In the C round, an additional $10,350,000 will be raised from the same syndication of VCs. If you wish to continue to maintain the same equity position, how much will you need to invest in this round? Assume the firm continues to be valued at cost. d. If the firm is acquired for $90.350,000 in the 9th year, is your required rate of return satisfied?
Expert Answer:
Answer rating: 100% (QA)
a In the A round the required equity position to justify a 1035000 investment if the preround valuat... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these finance questions
-
Write a while loop equivalent to the for loop below. You can either write your answer in the box or upload a .py file. Double-check that your file uploads correctly if you choose the second option....
-
This case study on project evaluation is applicable for beginning courses in corporate finance or finance strategy. Two alternative investment options are available to evaluate. Challenges are...
-
How many bits are needed to digitally record 90 seconds of your favorite music tune? The sampling rate commonly used for music is 44.1 kHz (i.e. 44100 Hz). Each sample is represented using 16 bits....
-
Reconsider Prob. 1444E Determine the required properties using EES (or other) software instead of the psychrometric chart. What would the property values be at a location at 5000 ft altitude?
-
In terms of the functions of money, is there really any functional difference between M1 and M2?
-
Teddys daily budget constraint is shown in the following chart. Teddys employer pays him a base wage rate plus overtime if he works more than the standard hours. What is Teddys daily nonlabor income?...
-
Martin is working to develop a preliminary costbenefit analysis for a new client-server system. He has identified a number of cost factors and values for the new system, summarized in the following...
-
Unusual shapes! At this point, we've gotten pretty comfortable with calculating the perimeter and area of squares and rectangles. In this assignment, we'll make a program that calculates these values...
-
A highly viscous liquid discharges from a large container through a small-diameter tube in laminar flow. Disregarding entrance effects and velocity heads, obtain a relation for the variation of fluid...
-
Apollo Limited commenced trading on 1st January 2020, issuing 471,000 1 ordinary shares at par. On the same day, the funds raised were used to purchase freehold land and buildings of 175,000, plant...
-
Outline the main stages in the new product development process, identifying the potential sources of failure at each stage.
-
a. What is the quantity of Newfoundland cod fish that fishers catch and the price of Newfoundland cod fish? Is the Newfoundland cod fish stock being used efficiently? Explain why or why not. b. What...
-
For each of the following goods, explain why a free-rider problem arises or how it is avoided. Public parks and gardens Wireless Internet access in cafs Wikipedia webpages Christmas tree lighting...
-
What is the nature of and the need for a social media policy?
-
What is the difference between the articles of organization and the operating agreement of a limited liability company?
-
Comparison of 2014 to 2013 performance, Weir Company's inventory turnover decressed bstantially, although sales and inventory amounts were essentially unchanged. quired: hich of the following...
-
Read the case study Richter: Information Technology at Hungarys Largest Pharma and answer the following question: How does the organization ensure the accuracy of the data it stores?
-
Patty Bayan is a single taxpayer living at 543 Space Drive, Houston, TX 77099. Her Social Security number is 466-33-1234. For 2012, Patty has no dependents, and her W-2 from her job at a local...
-
Mary paid $2,000 of state income taxes in 2012. The total sales tax she paid during 2012 was $5,500, which included $3,000 for the cost of a new car. How should Mary treat the taxes paid on her 2012...
-
Fisafolia Corporation has gross income from operations of $220,000 and operating expenses of $160,000 for 2012. The corporation also has $20,000 in dividends from publicly traded domestic...
-
Prove that the angular momentum operator \(L_{z}\) generates rotations around the \(z\)-axis.
-
Show that for real numbers \(\alpha, \beta\), and \(\delta\) the matrices form a group under matrix multiplication. Show that the matrices \(G\) with \(\alpha=\beta=0\) form an invariant subgroup of...
-
Show that the quotient group of the 4-group \(\mathrm{D}_{2}\) defined in Problem 2.9 is \(\mathrm{C}_{2}\).
Study smarter with the SolutionInn App