Question 1: Tiger Software was founded last year to develop software for gaming applications. The founder initially invested $700 000 and received 10 million shares. Tiger now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.0 million and wants to own 21% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 21% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? Question 2: Three years ago, you founded Outdoor Recreation, a retailer specialising in the sale of equipment and clothing for recreational activities such as camping, skiing and bushwalking. So far, your company has gone through three funding rounds: Round Date Investor Shares Share price ($) Class A Feb 2013 You 700 000 1.50 Class B Aug 2014 Angels 1 100 000 1.50 Class C Sept 2015 Venture capital 2 100 000 2.50 It is now 2016 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO. You would like to issue an additional 5.0 million new shares through this IPO. Assuming that your firm successfully completes its IPO, you forecast that 2016 net profit will be $7.5 million. a. Your investment banker advises you that the prices of other recent IPOs have been set such that the P/E ratios based on 2016 forecasted earnings average 20.7. Assuming that your IPO is set at a price that implies a similar multiple, what will your IPO price per share be? b. What percent of the firm will you own after the IPO