Owl is considering a $20M Series C investment in Newco, one year after two earlier investors: EBV (Series A) and Talltree (Series B). Owl proposes to structure the investment as 12M shares of convertible preferred stock. The employees of Newco have claims on 10M shares of common stock, and the previous venture investors hold 6M shares of Series A convertible preferred (EBV) and 8M shares of Series B Convertible Preferred (Talltree). Thus, following the Series C investment, Newco will have 10M common shares outstanding and would have 36M shares outstanding on conversion of the CP. Owl estimates a 50 percent probability for a successful exit, with an expected exit time in three years, and an exit valuation of $500M. The $500M Owl fund has fees structured as follows: 2.5 percent for years 1-3, and 2 percent for years 4-10. Owls expected GVM is 3.

What is your investment recommendation for Owl?