QUESTION 20

1. Startup Inc. (Post Series A Capitalization Table)
   	Shares		%
   Common Stock:
   Founders: Natalie & Matt	5,000,000		50%
   Series A Preferred Stock:
   CMU Ventures III, LP	5,000,000		50%
   Total Capital Stock	10,000,000		100%

   Use the above capitalization table for Startup Inc. (Startup) and assume that:

   • Founders (Natalie & Matt) purchased their shares of common stock for $0.001 per share (for a total of $5,000).
   • A venture capital fund managed by Tim and Hadley of CMU Ventures (CMUV) recently paid $1.00 for each share of its Series A preferred stock (for a total of $5,000,000).
   • Immediately after the Series A financing, CMUV has the right to convert each share of its Series A preferred stock into one share of common stock.
   • The Series A preferred stock has full ratchet price-based anti-dilution protection.
   • The Series A preferred stock has a ONE times liquidation preference right (i.e., LP = 1X) AND the Series A preferred stock is full participating.
   • The above capitalization table is accurate and complete (i.e., immediately after the Series A financing there are no other outstanding shares of stock or options to purchase stock).

   Using the Venture Capital valuation method we covered in class, what were CMUVs POST-money and PRE-money valuations of Startup?

   		POST-money = $10,000,000; PRE-money = $5,000,000
   		POST-money = $5,000,000; PRE-money = $10,000,000
   		POST-money = $5,000; PRE-money = $5,005,000
   		POST-money = $5,005,000; PRE-money = $5,000