MINI CASE: R.K.MAROON COMPANY R.K. Maroon is a seed-stage web-oriented entertainment company with important intellectual property. RKMs founders, all technology experts in the relevant area, are anticipating a quick leap to dot-com fortune and believe that their unique intellectual 181property will allow them to achieve a subsequent (year 3) $100,000,000 venture value with a one-time initial $2,000,000 in venture financing. In contrast, similar dot-commers in their niche are currently seeking multistage financing amounting to $10,000,000 to achieve comparable results. The founders have organized with 1,000,000 shares and are willing to grant venture investors a 100% return on their business plan projections.

C. Suppose the venture investors dont buy the business plan predictions and want to price the deal assuming a second round in year 2 of $8,000,000 with a 40% return. What changes?

E. Suppose that the deal is priced assuming the second round (as in Part C) and it turns

out to be unnecessary. Comment on the final ownership percentages at exit (year 3).

What do you conclude about the impact of anticipated but unrealized subsequent

financing rounds?

For the last question, how to understand this question, do I only need to focus on the situations of the first round investors and the founders.