A founder owns 100% of her startup. She is offered an equity investment by a VC investor, accepts, and eventually undergoes one more round of financing with a new VC investor. The financing events are as follows: VC investor 1 steps in with $0.5 million at a pre-money value of $2 million; later, VC investor 2 contributes $3 million at a pre-money of $7 million. After the second round of investment, what is the worth in stock of the founder, of VC1, and of VC2? What percentage of the company does each own?
A founder owns 100% of her startup. She is offered an equity investment by a VC investor, accepts, and eventually undergoes one more round of financing with a new VC investor. The financing events are as follows: VC investor 1 steps in with $0.5 million at a pre-money value of $2 million; later, VC investor 2 contributes $3 million at a pre-money of $7 million. After the second round of investment, what is the worth in stock of the founder, of VC1, and of VC2? What percentage of the company does each own?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A founder owns 100% of her startup. She is offered an equity investment by a VC investor, accepts, and eventually undergoes one more round of financing with a new VC investor. The financing events are as follows: VC investor 1 steps in with $0.5 million at a pre-money value of $2 million; later, VC investor 2 contributes $3 million at a pre-money of $7 million. After the second round of investment, what is the worth in stock of the founder, of VC1, and of VC2? What percentage of the company does each own?
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