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 9 million shares of stock.

image text in transcribed 

Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 9 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 33% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 33% 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)? a. How many shares must the venture capitalist receive to end up with 33% of the company? What is the implied price per share of this funding round? The venture capitalist will receive million shares. (Round to three decimal places.) The implied price per share is $ per share. (Round to the nearest cent.) b. What will the value of the whole firm be after this investment (the post-money valuation)? The value of the firm will be $ million. (Round to three decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the number of shares the venture capitalist will receive to end up with 23 of the company we can use the concept of proportional ownershi... 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

Fundamentals of Corporate Finance

Authors: Berk, DeMarzo, Harford

2nd edition

132148234, 978-0132148238

More Books

Students also viewed these Finance questions