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A VC holds 2 million shares of participating preferred stock in Company A , which were purchased for $ 1 0 million. The founders are
A VC holds million shares of participating preferred stock in Company A which were purchased for $ million. The founders are the only other shareholders and own million shares of common equity. The liquidation preference is X and there is a accruing and compounding dividend.
a The company is sold for $ million after years, how much will the VC recieve? b Now assume VC has participating preferred with a X LP and a accruing and compounding dividend. Before exit, the company raised an additional $M from VC in exchange for nonparticipating preferred stock with a liquidation preference equal to X and no dividends. If the company is sold for $M and follows a lastinfirstout model for liquidation. How much would the first VC receive? How much would VC receive? How much would the founders receive?
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