Starware Software was founded last year to develop software for gaming applications. The founder initially invested $1,000,000 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 $1.60 million and wants to own 31% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 31% 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 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 $1.60 million and wants to own 31% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 31% 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)?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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 $900,000 and received 8 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 $1.40 million and wants to own 12% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 12% 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 $900,000 and received 8 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 14% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 14% 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 14% 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.)
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.)
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 share
The 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?
Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $1,346,400 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 20,400 shares in the company and the two entrepreneurs will have combined holdings of 30,600 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) b. What value is the venture capitalist placing on each share?
The founders of XMP GmbH have created a successful software as a service platform and are now looking for venture capital to accelerate the growth of the company. Currently, the company is entirely founder-owned and has 10,000.00 shares outstanding. But before they start fundraising, they want their employees to participate in the success story of their business. Therefore, the founders issue shares to an employee share option program (ESOP) so that the entire ESOP represents 20.00% of the ownership of the company. Shortly after that, they receive an offer from the venture capital firm A-Capital. A-Capital offers to invest 4,000,000.00 € at a 16,000,000.00 € pre-money valuation. What is the price per share (PPS) of the round and the total number of shares post-round? 1) The price per share (PPS) equals 1,640.00 €; the total number of shares post-round equals 18,750.00. 2) The price per share (PPS) equals 1,220.00 €; the total number of shares post-round equals 16,525.00. 3) The…
Help Save & Ex Chee 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 company. 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? Value of each share < Prev 2 of 8 Next m arch hp 寻
Your start-up company needs capital. Right now, you own 100% of the firm with 9.99 million shares. You have received two offers from venture capitalists. The first offers to invest $2.99 million for 1.03 million new shares. The second offers $1.95 million for 500,000 new shares. a. What is the first offer's post-money valuation of the firm? b. What is the second offer's post-money valuation of the firm? c. What is the difference in the percentage dilution caused by each offer? d. What is the dilution per dollar invested for each offer? a. What is the first offer's post-money valuation of the firm? The first offer's post-money valuation will be $. (Round to the nearest dollar.)
A founder finds it difficult to raise capital so when he brings in his first outside investor, the investor obtains a full ratchet provision on his equity investor who invests $400000 for 400000 shares of the company. The founder holds 1000000 shares of the company. In the next round of financing the company, the company needs $550000 and the post-money value of the company is $1550000. What is the price per share expected to be in the next round of financing?
You founded your firm with a contribution of $700,000, receiving 1,000,000 shares of stock. Since then, you sold 5,000,000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $7,000,000 and would receive 5,000,000 newly issued shares. What is the post-money valuation? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000.

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