After reading the assigned case for Valhalla Partners, a write-up is needed for the case based on case questions posted below.

Note 1: All calculations should be specified in typed exhibits. Any excel spreadsheet work should be separately emailed to me AND be put in typed exhibits.

• Remember to adhere to the strict guidelines for the write-ups in the syllabus. Write-ups that are not consistent with the guidelines may lose part or all their points. There will be NO exceptions.
• Justify all important assumptions and give appropriate references for external data or information used.

Note 2: Generally, pro-rata contribution in a follow on round means that, for example, if the previous investors own 20% of the firm, and the next financing round is $10 million, they will contribute 0.2*10 = $2 million to the next financing round.

Assume that Valhalla decides to make the investment: What valuation do you think is appropriate at an assumed discount rate of 50%? What would be Valhalla's expected IRR from the investment at a $5 million pre-money valuation? What would be Valhalla's expected IRR from the investment at a $10 million pre-valuation. Remember to specify justifications for any assumptions that you use in your calculations (such as any expected series B rounds).

• Note: The term "valuation" in the above question refers to valuation of the firm at the time of VC investment. Calculate both pre- and post-money valuations.
• Hint: One way to go about this is to first calculate the expected cash flows for Valhalla, and back out the VC's share. Then you need to figure out cash investments that Valhalla will make in the company till expected exit time.