Question
ABC is seeking for funding from venture capital firms. Their minimum funding need is $15 million and they are willing to sell 20% ownership for
ABC is seeking for funding from venture capital firms. Their minimum funding need is $15 million and they are willing to sell 20% ownership for the fund. They got an offer from GE Venture Capital Group, that is $18 million for 25% ownership.
(1) Through calculations, find the post-valuation of ABC that ABC company initially used, and the post-valuation of ABC that is implied in the VC offer.
(2) In your opinion, should ABC take this offer? Why do you think so?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
