Refer to the sample cap table in Exhibit 5 of the Financing Entrepreneurial Ventures reading. If the seed round had taken place at a $2 million post-money valuationbut every other round happened according to the terms described in Exhibit 5who would be better off and who would be worse off (in terms of their ownership percentages of the company)?

• Only the founders would be better off.
• Everyone except the founders would be worse off.
• Everyone except the seed round investors would be better off.
• Everyone would be better off.

EXHIBIT 5 Sample Cap Table Stage Pre-Money / Post-Money Valuation Pre-money Investment Post-money Distribution of Equity Ownership Team VC1 VC2 Angel Seed $1M $250K (angel) $1.25M 80% 20% Series A $4M $1M (VC1) $5.00M 64% 16% 20% Series B $16M $4M (VC2) $20.00M 51% 13% 16% 20%