EBV has invested a $6M Series A investment in Newco. EBV proposes to structure the investment as 5M shares of convertible preferred stock. The founder and employees of Newco have claims on 10M shares of common stock. Thus, following the Series A investment, Newco will have 10M common shares outstanding and would have 15M shares outstanding on conversion of the CP.

In second round financing, B2V is considering a $10M Series B investment in Newco. B2V proposes to structure the investment as 5M shares of convertible preferred stock. Thus, following the Series B investment, Newco will have 15M common shares outstanding and would have 20M shares outstanding on conversion of the CP. B2V estimates a 40 percent probability for a successful exit, with an expected exit time in 4 years and an exit valuation of $500M.

Note: GP % =10%; expected retention by round is: 1st round = 50%, 2nd round = 60%, 3rd round = 67%, 4th round or later = 70%.

What is the recommendation for B2V GPs?

GP cost $________________________?

GP valuation $_____________________?

What is your investment recommendation for B2V LPs?

LP cost $________________________?

LP valuation $_____________________?

What is the target multiple of B2V?

Target multiple ________________?

Target return __________________?