What is the percentage equity ownership

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Consider a VC valuation of a young logistic firm, Monkey Delivery Pte Ltd. The firm, which is currently loss-making, is expected to generate a positive EBITDA of $1 million in five years (t = 5). Monkey Delivery is seeking $300,000 equity funding from a VC investor, who is expecting to exit the investment in 5 years with a target return of 50% and exit V/EBITDA valuation of 6x. Monkey Delivery, which is 100%-equity financed, has 500,000 common shares outstanding. What is the percentage equity ownership that Monkey Delivery must sell to the VC investor for its $300,000 investment (based on post-money valuation)? (Note: the VC's 50% target return includes compensation for both default and liquidity risks).

Reference no: EM133068860

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