Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Who can help me on these finance questions? The are really tough! An entrepreneur has 1000 shares of the venture. An early investor Invested $10,000
Who can help me on these finance questions? The are really tough!
An entrepreneur has 1000 shares of the venture. An early investor Invested $10,000 for 2000 shares that included a full ratchet provision ($5 per share). Now. in a subsequent round, an investor is willing to invest $8,000 for a 40% share of the ending equity. The premoney value at the time of this round is $12,000. Based on the information above, this is a "down round." It there had been no ratchet provision, the new investor would need 2000 shares to achieve a 40% interest, and the share price would be $4. With the ratchet, the post money share price would be $2 and the new investor would need 4,000 shares. The early investor would get 3,000 adStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started