In the first stage of financing of Hotmail, the pioneer internet email service, the VC firm Draper Fisher, Jurvetson (DFJ) provided VC capital in of the first stage according to the following terms: $315,000 in return for 15.75% equity stake. Prior to the VC financing, the entrepreneur had 10,490,272 shares outstanding.

c) Consider the VCs situation in first stage financing. In the negotiations prior to the final first stage terms, the entrepreneur is offering 15% stake in return for $300,000 cash infusion (the final first stage terms above were slightly different). It was anticipated that after successive rounds of VC financing over the years, the original VCs share would be diluted to 5% by the time of the exit at the IPO 5 years later. What must the estimated proceeds at the IPO be if the original VCs required rate of return for such investments is 50% per year? Assume no debt outstanding by the time of the IPO.