Inigma Inc., is a startup company formed 2 years ago. As part of a series A fundraising round, Timits LP a VC firm has issued a term sheet for the proposed deal. Pre-financing, Inigma has 12M common shares owned by the founders. In addition, the company has issued 2M common shares to its employees (an ISSUED employee stock pool). Timits term sheet includes an additional 1M UNISSUED common shares (an UNISSUED employee stock pool). This yields a total common share count pre-financing of 15M. Timits proposes a series A investment of $12M in 6M shares of convertible preferred stock. The series A can be converted to ordinary stock on a 1:1 basis. a) What is the series A aggregate price? b) What is the fully diluted share count under the proposed term sheet?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Inigma Inc., is a startup company formed 2 years ago. As part of a series A fundraising round, Timits LP a VC firm has issued a term sheet for the proposed deal. Pre-financing, Inigma has 12M common shares owned by the founders. In addition, the company has issued 2M common shares to its employees (an ISSUED employee stock pool). Timits term sheet includes an additional 1M UNISSUED common shares (an UNISSUED employee stock pool). This yields a total common share count pre-financing of 15M. Timits proposes a series A investment of $12M in 6M shares of convertible preferred stock. The series A can be converted to ordinary stock on a 1:1 basis. a) What is the series A aggregate price? b) What is the fully diluted share count under the proposed term sheet?

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