Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

A founder, F, develops a product in his/her garage. F and some family and friends money (call the total FFF) have invested $1MM of their

image text in transcribed

A founder, F, develops a product in his/her garage. F and some family and friends money (call the total FFF) have invested $1MM of their money in this startup (SU). They award themselves 1MM shares of stock for this investment. After two years, an angel investor (call it A) invests $2MM for 25% of the company in the form of Series A preferred stock. Two years later, a venture capitalist (call it VC) invests $4MM for 20% of the company. 3. Provide the following: Capitalization tables for initial case (post FFF), the post-A investment, and the post-VC investment What are the share prices after the A and VC investment? What is the earnings multiple (final value divided by initial investment for FFF, and A after the VC investment? a. b. c. Now assume that two years later a large corporation (C) buys 100% of the SU for $30 per share. What are the receipts for FFF, A and VC? What was the earnings multiple for each after the acquisition by C

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Introduction To Socio-Finance

Authors: Jørgen Vitting Andersen, Andrzej Nowak

2013th Edition

3642419437, 978-3642419430

More Books

Students explore these related Finance questions