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Skater Paradise provided funding for Swim Up start-up by investing convertible preferred shares. Swim Up expects to go public in 5 years, at which time
- Skater Paradise provided funding for Swim Up start-up by investing convertible preferred shares. Swim Up expects to go public in 5 years, at which time it expects to have a post IPO valuation of $ 4 Billion. Until the company goes public, preferred shares will pay 7% annual dividend.
- What percentage of post IPO equity should Venture Capital's shares to be converted in to provide Venture Capital its expected return?
- Assume that the percentage ownership agreement remains the same as in a. What actual return Venture Capital gets, if the IPO value is $ 14 billion? 1 Billion? What if instead of an IPO, the company is acquired at $400 Million in 5 years? Remember that Skater Paradise have convertible preferred shares.
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