Write the equation for the partial valuation of series a

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Question - Suppose that Add Venture Partners (AVP) is considering a £10m Series A investment in Beta. AVP proposes to structure the investment as 10 million shares of convertible preferred stock (CP) with 2.5x liquidation preference on the CP. The employees of Beta have claims on 5 million common shares. Following the Series A investment, Beta will have 5 million common shares outstanding and would have 15 million shares outstanding on conversion of the CP. AVP expects a Series A return of 3x in 3 years. AVP cost of venture capital is estimated to be 15%. Consider the following:

i. Write the equation for the partial valuation of Series A.

ii. Draw the exit diagram for the Series A.

iii. What is the implied total exit valuation of Beta in three years?

Reference no: EM133036559

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