Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Question
Chapter 23, Problem 3P
a.
Summary Introduction
To determine: The number of shares the venture capitalist receives to end up with 20% of the company and the implied price per share.
Introduction: Venture capitalists are investors who provide the capital to start-up business firms or give their support to small companies to expand their business.
b.
Summary Introduction
To determine: The post-money value of the whole firm after investment.
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Starware Software was founded last year to develop software for gaming applications. The founder initially invested $900,000Β and receivedΒ 10Β 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 $1.20Β million and wants to ownΒ 39%Β of the company after the investment is completed. a.Β How many shares must the venture capitalist receive to end up withΒ 39%Β of the company? What is the implied price per share of this funding round? b.Β What will the value of the whole firm be after this investmentΒ (the post-money valuation)?
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.)
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 ofβΒ 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 theβΒ company? What is the implied price per share of this fundingβΒ round?
b. What will the value of the whole firm be after this investmentβΒ (the post-moneyβΒ valuation)?
Chapter 23 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 23.1 - Prob. 1CCCh. 23.1 - Prob. 2CCCh. 23.2 - Prob. 1CCCh. 23.2 - Prob. 2CCCh. 23.3 - List and discuss four characteristics about IPOs...Ch. 23.3 - Prob. 2CCCh. 23.4 - Prob. 1CCCh. 23.4 - What is the average stock price reaction to an...Ch. 23 - Prob. 1PCh. 23 - What are the advantages and the disadvantages to a...
Ch. 23 - Prob. 3PCh. 23 - Suppose venture capital firm GSB partners raised...Ch. 23 - Prob. 5PCh. 23 - Prob. 6PCh. 23 - Prob. 7PCh. 23 - Prob. 8PCh. 23 - Prob. 9PCh. 23 - Prob. 10PCh. 23 - Prob. 11PCh. 23 - Prob. 12PCh. 23 - What is IPO underpricing? If you decide to try to...Ch. 23 - Prob. 14PCh. 23 - Prob. 15PCh. 23 - Prob. 16PCh. 23 - Prob. 17PCh. 23 - Prob. 18PCh. 23 - Prob. 19PCh. 23 - Prob. 20P
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