Question
As the founder of a startup company that designs portable scooters, you recently received a financing offer from Ali ventures. The investment amount will be
As the founder of a startup company that designs portable scooters, you recently received a financing offer from Ali ventures. The investment amount will be $5M at a pre-money valuation of $15M. Investors ask for participating preferred stock with a liquidation preference of 2.0x and a dividend of 10% per year. You expect that the company could be sold in 5 years.
A) What is the amount of the preferred terms?
B) What is the cash flow to the founders if the company is sold at $50M after 5 years?
C). What is the cash flow to the founders if the participating preferred stock has a cap of $40M?
D) Which option is better for you, with to without cap?
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