Consider a start-up that is valued at cost throughout the early stages of its life. a. Round
Question:
Consider a start-up that is valued at cost throughout the early stages of its life.
a. Round A: Cyprus Ventures invests $250,000, bringing the post-round valuation to $800,000.
What are the ownership percentages for the founder and Cyprus Ventures, if all voting rights are equal?
b. Round B: A syndication of Cypress Ventures, Specific Pacific Management, and Mountainhome Capital Group invests $750,000 each. Now determine the ownership for each party assuming the start-up is valued at cost.
c. What would be the minimum necessary voting rights for the founders to maintain control through both rounds of financing? (Control is defined as greater than 50% ownership, with percentages rounded to whole numbers.)
P-68
Step by Step Answer:
ISE Investments
ISBN: 9781266085963
13th International Edition
Authors: Zvi Bodie, Alex Kane, Alan Marcus