M4 Question:Star ware Software was founded last year todevelop software for gaming applications. Thefounder initially invested $1,000,000 and received99 million shares of stock. Star ware now needs toraise a second round of capital, and it hasidentified a venture capitalist who is interested ininvesting. This venture capitalist will invest $1.40million and wants to own 20% of the companyafter the investment is completed.a. How many shares must the venture capitalistreceive to end up with 20% of the company? Whatis the implied price per share of this fundinground?b. What will the value of the whole firm be afterthis investment (the post-money valuation)?Please proper explain and do not copy fromChegg. Otherwise i have to report the answer.

An investor that provides equity funding to the companies is known as a venture capitalist. These…

a. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? Please proper explain and do not copy from Chegg. Otherwise i have to report the answer.

a. How many shares must the venture capitalist receive to end up with 20% of the company? What is the implied price per share of this funding round? b. What will the value of the whole firm be after this investment (the post-money valuation)? Please proper explain and do not copy from Chegg. Otherwise i have to report the answer.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 3P: Benjamin Garcia’s start-up business is succeeding, but he needs $200,000 in additional funding to...

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