Reference no: EM132622777

What is the capitalisation model of the two option (Techstar and Founder.org) based on the following information:

• At the start-up, the founders own 10,000,000 of shares of common stock. There was no stock option pool at this time.
• Lovepop will be raising two rounds of funding: the seed & Series A round.
• At the first seed round, Lovepop issued convertible notes of $42,500 to 4 investors (Dorm Room Fund, Rough Draft Ventures & Founder.org). CN will convert into common shares at the lower of the valuation cap at $3 million or 20% discount of post money valuation.
• Founder.org & Techstars offer Lovepop with different terms.
• Techstar will purchase 6% of common stock for $18,000 and $100,000 convertible notes that will convert into preferred shares at the lower of the valuation cap at $3 million or 20% discount of post money valuation.
• Founder.org's offer: $300,000 convertible notes that will convert common shares at the lower of the valuation cap at $3 million or 25% discount of post money valuation. Founder.org indicated that they want their offer to be an exclusive round of funding. Lovepop needed to choose either Founder.org or Techstars.
• After accepting either offer Techstar or Founder.org, Lovepop raised Series A round of financing.
• At the Series A round of financing, investors offer $2 million at a $10 million post- money valuation for common shares.
• The Series A financing terms also included a provision that Lovepop must accept a stock option pool that will equal 10% of the company's fully diluted shares.
• For simplicity, we exclude accrued interests in convertible notes -- total convertible notes to be converted to common stocks are as shown:

o For Founder.org's case: CN=$342,500. 

o For Techstars.org's case: CN=$142,500.