Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Starware Software was founded last year to develop software for gaming applications. The founder initially invested 800,000 and received 8 million shares of stock. Starware

Starware Software was founded last year to develop software for gaming applications. The founder initially invested 800,000 and received 8 million shares of stock. Starware 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 1.00 million and wants to own 20% of the company after the investment is completed.

a. How many shares must the venture capitalist receive to end up with 20% 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)?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Chains Of Finance How Investment Management Is Shaped

Authors: Diane-Laure Arjalies, Philip Grant, Iain Hardie, Donald MacKenzie, Ekaterina Svetlova

1st Edition

0198802943, 978-0198802945

More Books

Students also viewed these Finance questions

Question

Employ effective vocal cues Employ effective visual cues

Answered: 1 week ago