Caleb Clark Ventures invests $2 million in convertible preferred stock in a company with an $8 million pre-money valuation. The term sheet shows the investment is non-participating with 1x liquidation preference. Answer the following: A) What is the ownership percentage of the VC after the investment? 20% B) At what exit value is the VC indifferent between either converting or not converting? C) Assume the preferred stock is participating. At an exit value of $15,000,000, what is the payoff to the VC?
Caleb Clark Ventures invests $2 million in convertible
Answer the following:
A) What is the ownership percentage of the VC after the investment? 20%
B) At what exit value is the VC indifferent between either converting or not converting?
C) Assume the preferred stock is participating. At an exit value of $15,000,000, what is the payoff to the VC?
D) Assume the preferred stock is participating. At an exit value of $15,000,000, what is the payoff to the common stockholders (i.e. Founders & Management)?
E) If the VC owned non-participating convertible preferred stock with a 2x liquidation preference at what exit value is the VC indifferent between either converting or not converting?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
