The founders of the start-up need additional capital to expand the business and they arrange an A of financing with a venture capital firm that agrees to provide $2,000,000 in exchange for 40% ownership; however to invest in the start-up the Series A investors require Participating Preferred shares as follows: Participating Preferred shares with senior priority in receiving all proceeds from a sale or liquidation, up to the original investment amount ($2,000,000) Owners / Investors Security Shares Percent Investment Share Price Founders Common 6,000,000 60% $50,000 $0.0083 Series A Participating Preferred 4,000,000 40% $2,000,000 $0.50 The Pre-Money Valuation is $3,000,000 The Post-Money Valuation is $5,000,000 If the company were sold for $3,000,000

29. How much money would the Series A investors receive?

30. How much money would the founders receive?

If the company were sold for $6,000,000 31.

How much money would the Series A investors receive?

32. How much money would the founders receive?