Question
Dino-Fi has been approached by a Venture Capital investor, that would like to invest $500,000 into Dino-Fi. The CEO is interested in this opportunity because
Dino-Fi has been approached by a Venture Capital investor, that would like to invest $500,000 into Dino-Fi. The CEO is interested in this opportunity because it would help the company skip a step in his mind, by alleviating the need for the business to raise $200,000 from Angel investors before approaching a VC. The CEO is preparing for the term sheet negotiations and wants to know how much ownership he should be willing to give up to secure an equity investment of $500,000. Projections show that Dino-Fi could be worth $10,000,000 in 5 years, and you suspect that the VCs hurdle rate for an investment of this size and nature would be 35%. How much company ownership should Richard be willing to give up for the $500,000 investment?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started