Marlies and Torties venture Borsolona produces reusable plastic-like shopping bags made out of used tea leaves. They managed to obtain financing from Lissilo Ventures through convertible preferred stock. They secured an investment of $3M at a pre-money valuation of $6M.

1. Compute Lissilos ownership share.

The convertibles preferred terms are given by a liquidation preference of 1.33x and a dividend of 8.33%. The expected exit is projected four years down the road.

2. Compute Lissilos preferred terms at the expected time of exit.

3.Compute the conversion threshold for this security at the expected time of exit.

4. What would be the cash flow to Marlie and Tortie if Borsolona was sold at $20M after four years?

The Sigmund venture is raising $100.000 from an angel through a convertible note (CN) that offers a discount of 20% and has a maturity of 18 months. After 12 months, Sigmund raises $1M from a venture capital firm through the issue of convertible preferred shares at a price of $1.5 per share.

1. What is the price at which the angel buys the shares?

2. How many shares does the angel receive?

3. If Sigmunds founders originally held 450.000 shares, what is Sigmunds pre-money valuation at the venture round?