what's your intituon about whats happened to the value of the founder's shares?

The $500 on the equity side is split between the founders (80%) and the venture capitalists (20%), so the founders' stake is worth $400 ($500 multiplied by 80%) and the venture capitalist's stake is worth $100 ($500 multiplied by 20%). Finally, 25 shares are issued to the venture capitalist to represent her share of the equity, for a total of 125 shares the founders currently have 100 shares, and 100 shares are 80% of 125; likewise, 25 shares are 20% of 125). The value of each share is $4 ($500 of equity divided by 125 shares) ASSETS LIABILITIES & NET WORTH Cash Operating Assets 200 300 400 Equity (Founders) 100 Equity (Investors) 125 shares $4.00 / share > Access image details This round of funding makes the previously unknown value of the business before the funding (this is sometimes called pre-money) clear. We know the operating assets were worth $300 and we know the founders' shares were worth $400 ($300 in assets plus $100 in cash) prior to the financing. ASSETS LIABILITIES & NET WORTH Cash Operating Assets 200 300 400 Equity (Founders) 100 Equity (Investors) 125 shares $4.00 / share > Access image details This round of funding makes the previously unknown value of the business before the funding (this is sometimes called pre-money) clear. We know the operating assets were worth $300 and we know the founders' shares were worth $400 ($300 in assets plus $100 in cash) prior to the financing. ASSETS LIABILITIES & NET WORTH Cash Operating Assets 100 300 400 Equity (Founders) 100 shares $4.00 / share A Access image details ASSETS LIABILITIES & NET WORTH Cash Operating Assets 100 300 400 Equity (Founders) 100 shares $4.00 / share > Access image details Q Now, let's imagine that the company goes back a few years later for a second round of financing (the B series). The company doesn't have any more cash on hand (its cash balance is $0), and it's asking for $1,000 in investment. The Series B investors ask for 50% of the company in return for the $1,000 investment. What does the balance sheet look like after this round of financing and what are the founders' shares now worth? This is extremely difficult. If you can't quite figure it out, what's your intuition about what's happened to the value of the founders' shares? The $500 on the equity side is split between the founders (80%) and the venture capitalists (20%), so the founders' stake is worth $400 ($500 multiplied by 80%) and the venture capitalist's stake is worth $100 ($500 multiplied by 20%). Finally, 25 shares are issued to the venture capitalist to represent her share of the equity, for a total of 125 shares the founders currently have 100 shares, and 100 shares are 80% of 125; likewise, 25 shares are 20% of 125). The value of each share is $4 ($500 of equity divided by 125 shares) ASSETS LIABILITIES & NET WORTH Cash Operating Assets 200 300 400 Equity (Founders) 100 Equity (Investors) 125 shares $4.00 / share > Access image details This round of funding makes the previously unknown value of the business before the funding (this is sometimes called pre-money) clear. We know the operating assets were worth $300 and we know the founders' shares were worth $400 ($300 in assets plus $100 in cash) prior to the financing. ASSETS LIABILITIES & NET WORTH Cash Operating Assets 200 300 400 Equity (Founders) 100 Equity (Investors) 125 shares $4.00 / share > Access image details This round of funding makes the previously unknown value of the business before the funding (this is sometimes called pre-money) clear. We know the operating assets were worth $300 and we know the founders' shares were worth $400 ($300 in assets plus $100 in cash) prior to the financing. ASSETS LIABILITIES & NET WORTH Cash Operating Assets 100 300 400 Equity (Founders) 100 shares $4.00 / share A Access image details ASSETS LIABILITIES & NET WORTH Cash Operating Assets 100 300 400 Equity (Founders) 100 shares $4.00 / share > Access image details Q Now, let's imagine that the company goes back a few years later for a second round of financing (the B series). The company doesn't have any more cash on hand (its cash balance is $0), and it's asking for $1,000 in investment. The Series B investors ask for 50% of the company in return for the $1,000 investment. What does the balance sheet look like after this round of financing and what are the founders' shares now worth? This is extremely difficult. If you can't quite figure it out, what's your intuition about what's happened to the value of the founders' shares