Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $918,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the cormpany. Under the plans for the investment, the VC will hold 16,400 shares in the company and the two entrepreneurs will have combined holdings of 24,600 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) Valuation of the firm b. What value is the venture capitalist placing on each share?
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- Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $700,000 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 14,000 shares in the company and the two entrepreneurs will have combined holdings of 21,000 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) Valuation of the firm b. What value is the venture capitalist placing on each share? Value of each shareLuma, a startup company, provides a platform for people to host virtual classes, record live shows, educate, and find their communities via Zoom. Suppose a founder owns 100% of the startup and currently has 0.5 million shares. The founder plans to raise $3 million from Venick (a venture capital firm investing in technology and healthcare companies) in Series A financing with the pre-money valuation of $10 million. An option pool of 15% is reserved for future employees. Given the information, find the Price/shares paid by Venrock following capitalization table AFTER series A. $2.7 $7.2 $12.5 O $16.1The startup management is looking to raise venture capital. The pre-money valuation is $10,000,000 with two co-founders holding 40% of the shares each and two investors holding 10% respectively. Now, the platform receives a venture capital injection of $10,000,000. Answer the following questions: i. What is the post-money valuation in $? ii. How much equity does each founder hold in % and $ after the capital injection? iii. How much equity does the venture capital firm hold in % and $ after the capital injection?
- An entrepreneur first started his business with $100,000. Later, a venture capitalist (VC) agrees to invest $300,000 to sustain the growth. In return, this VC will take up a 50% equity position in the firm. How much is this business worth now? (Show your calculations)Starware Software was founded last year to develop software for gaming applications. The founder initially invested $900,000 and received 10 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.20 million and wants to own 39% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 39% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)?Starware Software was founded last year to develop software for gaming applications. The founder initially invested $1,000,000 and received 12 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.00 million and wants to own 18% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 18% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? a. How many shares must the venture capitalist receive to end up with 33% of the company? What is the implied price per share of this funding round? The venture capitalist will receive million shares. (Round to three decimal places.) The implied price per share is $ per share. (Round to the nearest cent.) b. What will the value of the…
- Finding the WACC. Monica is the CFO of Cooking for Friends (CFF) and uses the pecking order hypothesis philosophy when she raises capital for company projects. Currently, she can borrow up to $450,000 from her bank at a rate of 7.75%, float a bond for $800,000 at a rate of 10%, or issue additional stock for $1,500,000 at a cost of 15%. What is the WACC for CFF if Monica chooses to invest A. $900,000 in new projects? B. $200,000 in new projects? C. $2,750,000 in new projects?Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 8.000 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.0 million and wants to own 20% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? a. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? The venture capitalist will receive million shares. (Round to three decimal places.)A financial services company is considering a new investment in a new technology platform for investment management. The company has identified a fintech startup that is seeking funding at a valuation of $5 million. The company expects to receive a dividend of $200,000 per year over a five year term and sells it equity stake at a valuation of $10 million. What is the expected return on investment if the financial services company invests $2 million in the fintech startup
- You are working for a venture capitalist (VC). The VC is interested in acquiring a one-third stake in a start-up. The total value (i.e., PV of future expected cash flows) of the start-up is one of $30M, $45M, $60M, $75M, $90M. The VC regards the five outcomes as equally likely. The start-up is currently wholly owned by its founder. The founder knows the details of the start-up's prospects, and so knows the start-up's total value. The founder needs liquid cash to cover personal expenses, and moreover is risk averse and would like to partially diversify. For these reasons, the founder values any offer from the VC at 50% more than the amount of the offer. For example: If the VC offers $10M for the one-third stake, the founder values this offer at $15M. Assume that if the founder is indifferent between accepting and rejecting an offer then the founder accepts. The VC seeks to maximize expected profits. What offer(s), if any, should the VC make? Show your work by filling out the following…Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 12 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.00 million and wants to own 13% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 13% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)?Starware Software was founded last year to develop software for gaming applications. The founder initially invested $700,000 and received 9 million shares of stock. Starware now needs to raise a second round of capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.20 million and wants to own 13% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 13% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? a. How many shares must the venture capitalist receive to end up with 13% of the company? The venture capitalists will receive million shares. (Round to three decimal places.)