Topic: VENTURE CAPITAL

You founded Agassiz Technologies, Inc. in June 2020. At that time you invested $50,000 of personal money in return for common stock priced at $0.10 per share. You also set aside another 25,000 shares of common stock at that time for employee incentive options. Today you are seeking a seed investment from a venture capital firm of $600,000 in June 2021. You are also seeking a Series A investment of $8,000,000 from the same VC firm in June 2022. Your business plan anticipates being acquired by a strategic corporate investor in June 2025 at a P/R ratio of 2. Agassiz Technologies' income statement in 2025 is projected to be: Gross Sales Revenues $50,000,000 Cost of Goods Sold 24,500,000 Gross Profit 25,500,000 Sales & Marketing 3,500,000 Research & Development 6,500,000 Depreciation 4,700,000 General & Administrative 2,500,000 Total Operating Expenses 17,200,000 Operating Income 8,300,000 Interest Expense Taxes 2,900,000 Income from Continuing Operations 5,400,000 Extraordinary Expenses Net Income $5,400,000You have received term sheets from 2 venture capital firms, VC#1 and VC#2. VC#1 has been in the venture finance business for 15 years and has significant experience with Agassiz Technologies' core technology. Their term sheet includes: . $600,000 seed investment in June 2021 in the form of a convertible note with an 4% compounding annual interest rate, an 18-month term, and a 30% conversion discount on the Series A share price. To trigger conversion, the Series A investment must be at least $1,000,000. There is no valuation cap on the note. . $8,000,000 Series A investment in June 2022 in the form of a priced round in return for common stock. VC#1 desires a target return on their Series A investment of 3.5 times the investment at the time of the 2025 acquisition. Assuming Agassiz Technologies goes according to plan, what are the post-money and pre-money valuations of VC#1's Series A investment? Explain, briefly, how you arrived at these numbers