You are the CEO of Itelanet, Inc. an IT start-up. Time (present): end of year 4, company was founded 4 years ago. Itelanet has completed two rounds of financing Founders invested $1.00 in Year 0 $7.5 at end of year 2 \% Ownership after A Round Founders A Round Investors Cash Balance: end of year 4. beginning of year 5 Year Expected Operating Cash Flow \begin{tabular}{r|r|r|r|r|r|r|r|} 5 & 6 & 7 & 8 & 9 \\ \hline($3) & ($11) & ($14) & ($12) & ($10) \\ \hline \end{tabular} Itelanet expects to launch its first commercial product in Year 8. Snowscape Ventures has submitted a term sheet for Itelanet's Round B. Funding will be provided at the end of Year 5, 3 years after the A Round Snowscape Ventures' Proposal Amount Invested \% Ownership Part A (i) If Itelanet accepts Snowscape's term-sheet, when will the next round of financing be required? (ii) What are A and B Round (Snowscape's proposal) pre-money and post-money valuations? (iii) What are A and B Round (Snowscape's proposal) pre-money and post-money valuations? (iv) What most likely accounted for the valuation step-up between the A and B Rounds? (v) Construct the capitalization tables (\% ownership and \$ Ownership) for Itelanet for all three financing rounds: Founders, Round A, Round B vi) Why or why not would existing investors be satisfied with the progress the company made between the A and B rounds? Part B (i) What \% Ownership would Mesa Blanca want at the B Round? (ii) What are the advantages and disadvantages of Mesa Blanca's proposal vs Seascape's? (iii) Which would you choose? Why? You are the CEO of Itelanet, Inc. an IT start-up. Time (present): end of year 4, company was founded 4 years ago. Itelanet has completed two rounds of financing Founders invested $1.00 in Year 0 $7.5 at end of year 2 \% Ownership after A Round Founders A Round Investors Cash Balance: end of year 4. beginning of year 5 Year Expected Operating Cash Flow \begin{tabular}{r|r|r|r|r|r|r|r|} 5 & 6 & 7 & 8 & 9 \\ \hline($3) & ($11) & ($14) & ($12) & ($10) \\ \hline \end{tabular} Itelanet expects to launch its first commercial product in Year 8. Snowscape Ventures has submitted a term sheet for Itelanet's Round B. Funding will be provided at the end of Year 5, 3 years after the A Round Snowscape Ventures' Proposal Amount Invested \% Ownership Part A (i) If Itelanet accepts Snowscape's term-sheet, when will the next round of financing be required? (ii) What are A and B Round (Snowscape's proposal) pre-money and post-money valuations? (iii) What are A and B Round (Snowscape's proposal) pre-money and post-money valuations? (iv) What most likely accounted for the valuation step-up between the A and B Rounds? (v) Construct the capitalization tables (\% ownership and \$ Ownership) for Itelanet for all three financing rounds: Founders, Round A, Round B vi) Why or why not would existing investors be satisfied with the progress the company made between the A and B rounds? Part B (i) What \% Ownership would Mesa Blanca want at the B Round? (ii) What are the advantages and disadvantages of Mesa Blanca's proposal vs Seascape's? (iii) Which would you choose? Why