Question

You have been asked to value LaDefense Inc, a Technology start-up, in its multiple rounds of financing. Mr. Defense, a serial entrepreneur, need € 8 million today and € 7 million 2 years later and finally € 9 million 4 years later. Mr. LaDefense is planning to go public in 6 years with an estimated IPO value of € 150 million. Mr. LaDefense and his partners want to have 1 million shares, and the discount rate is 38%.

a. What are pre- and post-money valuation for the first, second, and third rounds of financing?

Answer 1

1) Pre-money Valuation - the valuation of a company or asset prior to an investment

2) Post-money Valuation - the valuation of a company or asset after an investment is done. This is equal to sum of the pre-money valuation and the amount of new equity

The Pre-Money and Post-Money valuation of the 3 rounds of financing is provided in the excel table below