Reference no: EM133239377

Founders - 950,000 common shares

Current Management - 300,000 common shares

Series A Investor - 750,000 Series A preferred shares

Total shares - 2,000,000 fully diluted shares

The Series A investor provided $1 million of financing. Current management was hired in connection with the Series A financing; assume their shares were issued immediately prior to the closing of Series A.

Your venture fund plan to provide a $3 million Series B financing and have settled upon a $7 million pre-money valuation. Immediately prior to the Series B financing (in other words, at the sole expense of the other pre-existing shareholders), you want to issue new shares to increase current management's ownership such that it will constitute 18% of the post-Series B capitalization.

Please calculate the following:

(i) The price per share of the Series A financing.

(ii) The postmoney valuation of the Series A financing.

(iii) The premoney valuation of the Series A financing.

(iv) The postmoney valuation of the Series B financing.

(v) The percentage ownership you will acquire in the Series B financing.

(vi) The percentage ownership that will be retained by the combination of the founders, the current management, and the Series A investor.

(vii) The number of additional shares that should be issued to management.

(viii) The number of shares that you should purchase in the Series B financing.

(ix) The price per share of the Series B financing.