VC Math HW

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School

Columbia University *

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Course

6015

Subject

Finance

Date

Feb 20, 2024

Type

docx

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2

Uploaded by ChefKangaroo15014

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1) Startup X raises 2 rounds of financing. At the end of the series A round, what percent of the company do the founder, seed investors, and series A investors own and what share price did the seed and series A investor pay? Assume no pro-rata rights or none exercised and assume founders are initially issued 5M shares. Priced equity seed round = $1.5M raise, $5M pre-money valuation Priced equity series A = $3M raise, $8M pre-money valuation 2) Startup Y raises 2 rounds of financing. At the end of the series A round, what percent of the company do the founder, seed investors, and series A investors own and what share price did the seed and series A investor pay? Assume no pro-rata rights or none exercised and assume founders are initially issued 5M shares. Assume no interest rate. 1. Seed round = $1M raise, $5M cap, 25% discount 2. Series A = $1M raise, $6M pre-money valuation 3) Startup Z has an acquisition offer in front of them for $30M. They raised a seed round which you invested in (you put in $250K). They also raised an A and you did not invest any additional money. They are trying to decide between accepting the acquisition offer today or raising a series B which they think will increase their acquisition price to $65M. As a seed investor, which option do you prefer and why? Seed round = $1M raise, $4M pre-money valuation Series A = $5M raise, $15M pre-money valuation Proposed Series B = $10M raise, $25M pre-money valuation 4) There is a $50M fund. Ignore management fees. At the end of 10 years, they are able to return $150M (meaning $100M on top of the original $50M). How much money does the VC retain in carry and how much is distributed to the LPs? 5) There is a VC fund that made 50 investments of $1M each. In Jan 2009 and 2010, they made 10 investments each year - all of these folded with $0 liquidation value In Jan 2011, they made 10 investments - all of these returned the investor's money in Jan 2014 In Jan 2012, they made 10 investments - all of these doubled the investor's money in Jan 2015 In Jan 2013, they made 10 investments - 5 of these tripled the investor's money (meaning returned $3M) and exited in Jan 2017. 3 of the investments made 6x (meaning returned $6M) and exited in
Jan 2018. The last 2 investments made 20x and exited in Jan 2018. What is the gross IRR of this fund (meaning, don't worry about fees/carry)? 6) For this question, use only using public sources of data and make reasonable assumptions (I shared data sources and guidelines throughout the class). Assume an angel invested $25K into Alice (aliceplatform.com, hotel software startup). Assume they did not exercise their pro-rata rights. Assume all rounds were priced rounds. After the series B, what would the angel's investment be worth?
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