18.4 The CEO of an early-stage software company is seeking $5 million from venture capitalists. The reasonable
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18.4 The CEO of an early-stage software company is seeking $5 million from venture capitalists. The reasonable projected net income of $5 million in year 5 can be valued at a PE of 20.
Furthermore, the sales in year 5 are projected at $25 million.
What share of the company would the venture capitalists require if their anticipated rate of return were 50 percent? The company has one million shares outstanding before the venture capitalists purchase shares. What price per share should the venture capitalists pay?
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Related Book For 
Technology Ventures From Idea To Enterprise
ISBN: 9780073523422
3rh Edition
Authors: Thomas Byers, Richard C Dorf
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