Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The founders of a start-up issued themselves 1,000,000 shares of common stock when the company was formed. One year later, a venture investor provided $500,000

The founders of a start-up issued themselves 1,000,000 shares of common stock when the company was formed. One year later, a venture investor provided $500,000 in return for preferred stock shares convertible into 500,000 shares of common stock ($1.00 per share). The venture investor negotiated FULL RATCHET anti-dilution protection at the time of the $500,000 investment. Subsequently the company needed to raise $625,000 and did so by issuing 1,000,000 new shares of convertible preferred stock ($.625 per share). Initial conversion price is $1/share Company sells 1,000,000 new shares at $.625

What are the percentage ownership interests of the Founders, Round 1 and Round 2 investors after the $625,000 Round 2 investment (based on the Round 1 investors FULL-RATCHET anti-dilution protection)? (1)

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_2

Step: 3

blur-text-image_3

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

Financial Institutions Management A Risk Management Approach

Authors: Anthony Saunders, Marcia Millon Cornett

9th edition

1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772

More Books

Students also viewed these Finance questions

Question

Define and compare formative and summative evaluations.

Answered: 1 week ago

Question

What are the characteristics of informative speaking?

Answered: 1 week ago