A startup has received a $500,000 seed investment in the form of a convertible note, which will convert at the lower of (1) the price per share in the next equity financing with a 20% discount, or (2) a pre-money valuation of $4 million. The next equity financing is defined as a round of financing where at least $2 million is raised, including the conversion of the $500,000 convertible note.

Assume that the founding team has one million shares outstanding prior to the seed round financing.

The Series A investor is offering an investment of $2 million in return for 30% of the company.

Answer the questions:

1. How much is the Series A round worth and does it qualify as next equity financing?
2. Calculate the capped price of the shares to the Seed investor
3. Find the price of the shares for the Series A investor
4. Calculate the discounted price to the Seed investor
5. Which price will apply in the conversion of the note?
6. Create the cap table with the final distribution of shares