Question 1 Inigma Inc., is a startup company formed 2 years ago. As part of a series A fundraising round, Timits LP a VC firm has issued a term sheet for the proposed deal. Pre-financing, Inigma has 12M common shares owned by the founders. In addition, the company has issued 2M common shares to its employees (an ISSUED employee stock pool). Timits term sheet includes an additional 1M UNISSUED common shares (an UNISSUED employee stock pool). This yields a total common share count pre-financing of 15M. Timits proposes a series A investment of $12M in 6M shares of convertible preferred stock. The series A can be converted to ordinary stock on a 1:1 basis. a) What is the series A original purchase price? b) What is the series A aggregate price? c) What is the fully diluted share count under the proposed term sheet? d) What is the proposed ownership percentage? e) What is the post-money valuation? f) What is the pre-money valuation? Question 2 Enigma Inc., is a startup company formed 3 years ago. The current capital structure consists of 15M common shares (ordinary shares) owned by the founder, employees and family members, and 12M convertible preferred stock owned by Timits LP a VC firm. In the event of an IPO or an acquisition of Enigma, Timits has the choice of converting each share of preferred stock into one share of common stock OR redeemeption for $2 per share, a total of $24M. g) Create an EXIT diagram for the convertible preferred stock. Please be careful to label carefully and include slopes where necessary. h) What is the conversion condition?

Question 1 Inigma Inc., is a startup company formed 2 years ago. As part of a series A fundraising round, Timits LP a VC firm has issued a term sheet for the proposed deal. Pre-financing, Inigma has 12M common shares owned by the founders. In addition, the company has issued 2M common shares to its employees (an ISSUED employee stock pool). Timits term sheet includes an additional 1M UNISSUED common shares (an UNISSUED employee stock pool). This yields a total common share count pre-financing of 15M. Timits proposes a series A investment of $12M in 6M shares of convertible preferred stock. The series A can be converted to ordinary stock on a 1:1 basis. a) What is the series A original purchase price? b) What is the series A aggregate price? c) What is the fully diluted share count under the proposed term sheet? d) What is the proposed ownership percentage? e) What is the post-money valuation? f) What is the pre-money valuation? Question 2 Enigma Inc., is a startup company formed 3 years ago. The current capital structure consists of 15M common shares (ordinary shares) owned by the founder, employees and family members, and 12M convertible preferred stock owned by Timits LP a VC firm. In the event of an IPO or an acquisition of Enigma, Timits has the choice of converting each share of preferred stock into one share of common stock OR redeemeption for $2 per share, a total of $24M. 9) Create an EXIT diagram for the convertible preferred stock. Please be careful to label carefully and include slopes where necessary. h) What is the conversion condition? Question 1 Inigma Inc., is a startup company formed 2 years ago. As part of a series A fundraising round, Timits LP a VC firm has issued a term sheet for the proposed deal. Pre-financing, Inigma has 12M common shares owned by the founders. In addition, the company has issued 2M common shares to its employees (an ISSUED employee stock pool). Timits term sheet includes an additional 1M UNISSUED common shares (an UNISSUED employee stock pool). This yields a total common share count pre-financing of 15M. Timits proposes a series A investment of $12M in 6M shares of convertible preferred stock. The series A can be converted to ordinary stock on a 1:1 basis. a) What is the series A original purchase price? b) What is the series A aggregate price? c) What is the fully diluted share count under the proposed term sheet? d) What is the proposed ownership percentage? e) What is the post-money valuation? f) What is the pre-money valuation? Question 2 Enigma Inc., is a startup company formed 3 years ago. The current capital structure consists of 15M common shares (ordinary shares) owned by the founder, employees and family members, and 12M convertible preferred stock owned by Timits LP a VC firm. In the event of an IPO or an acquisition of Enigma, Timits has the choice of converting each share of preferred stock into one share of common stock OR redeemeption for $2 per share, a total of $24M. 9) Create an EXIT diagram for the convertible preferred stock. Please be careful to label carefully and include slopes where necessary. h) What is the conversion condition