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Assume the following: 1. There are one million shares outstanding, and they are all owned by the founders. 2. There are no employee stock options

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Assume the following: 1. There are one million shares outstanding, and they are all owned by the founders. 2. There are no employee stock options granted. 3. The pre-money valuation, ignoring the dilution by potential stock options, is $20 million. 4. A new investor from whom the company is seeking funds wants a 20% interest in the company and invests $5 million. 5. The new investor wants 15% post-money valuation for the option pool available. 6. The security purchased is a convertible preferred stock that entitles the investor to convert the security into common stock. Complete the following capitalization table: Pre-money Ownership interest Post-money Ownership interest Founders Option pool New investor Total

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