Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose a VC opportunity requires $ 1.5 million to bring the company to profitability in five years. If the estimated value of the company is

image text in transcribed

Suppose a VC opportunity requires $ 1.5 million to bring the company to profitability in five years. If the estimated value of the company is $ 20 million at that point, what ownership percentage will the VC require if their target return is 40%? Suppose in the prior example, that the VC firm believes that additional capital will need to be raised in two years to fund the plan, and that the future investment will require 20% of the company. Now how much of the company will the VC firm require initially? Suppose a VC opportunity requires $ 1.5 million to bring the company to profitability in five years. If the estimated value of the company is $ 20 million at that point, what ownership percentage will the VC require if their target return is 40%? Suppose in the prior example, that the VC firm believes that additional capital will need to be raised in two years to fund the plan, and that the future investment will require 20% of the company. Now how much of the company will the VC firm require initially

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

Principles Of Managerial Finance

Authors: Chad J. Zutter, Scott Smart

16th Edition

0136945880, 978-0136945888

More Books

Students also viewed these Finance questions

Question

2 What factors lead to consistently successful projects?

Answered: 1 week ago

Question

d. Is the program accredited?

Answered: 1 week ago