Question

You founded your own firm three years ago. You initially contributed ​$200,000 of your own money...

You founded your own firm three years ago. You initially contributed ​$200,000 of your own money and in return you received 2 million shares of stock. Since​ then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest​ $5 million and would receive 2 million newly issued shares in return. Suppose you had sold the 1 million shares to the angel investor for ​$500,000. What would have been your percentage ownership in the company immediately following the angel​ investor's investment?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Sol:

Your shareholding = 2 million shares

Angel investor shareholding = 1 million share

Total number of shares = 2 million + 1 million = 3 million

To determine your percentage ownership in the company immediately following the angel​ investor's investment:

Your percentage ownership = Your shareholding / Total number of shares

Your percentage ownership = 2 million / 3 million = 0.666666 or 66.67%

Therefore your percentage ownership in the company immediately following the angel​ investor's investment will be approximate 66.67%

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1- You founded your firm with a contribution of $855000, receiving 1500000 shares of stock. Since...
1- You founded your firm with a contribution of $855000, receiving 1500000 shares of stock. Since then, you sold 1500000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $8500000 and would receive 4000000 newly issued shares. If this is the VC's first investment in the company, what percentage of the firm will they end up owning? 2- You founded your firm with a contribution of $855000, receiving 1500000 shares of...
"You founded your firm with a contribution of $120000, receiving 2000000 shares of stock. Since then,...
"You founded your firm with a contribution of $120000, receiving 2000000 shares of stock. Since then, you sold 1000000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $10000000 and would receive 4000000 newly issued shares. 1. What is the post-money valuation? 2. If this is the VC's first investment in the company, what percentage of the firm will they end up owning? 3. If this is the VC's first investment...
founded a firm that currently has 14 million​ shares, of which you own 8 million. You...
founded a firm that currently has 14 million​ shares, of which you own 8 million. You are considering an IPO where you would sell 1 million shares for ​$21 each. If all of the shares sold are​ secondary, what is the maximum number of secondary shares you could sell and still retain more than 50 % ownership of the​ firm? How much would the firm raise in that​ case? What is the maximum number of secondary shares you could sell...
3. Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of...
3. Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your company has gone through three funding rounds: Round Date Investor Shares Share Price ($) Series A Feb. 2009 You 600,000 1.00 Series B Aug. 2010 Angels 1,200,000 2.50 Series C Sept. 2011 Venture capital 2,000,000 3.25 It is currently 2012 and you need to raise additional capital to expand...
Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment...
Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your company has gone through three funding rounds: Round Date Investor Shares Share Price ($) Series A Feb. 2009 You 500 000 1.00 Series B Aug. 2010 Angels 1 000 000 2.00 Series C Sept. 2011 Venture Capital 2 000 000 3.50 Currently, it is 2012 and you need to raise...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested $800,000 and received 12 million shares of stock. Starware now needs to raise a second round of? capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $1.20 million and wants to own 20% of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 20%...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested $ 700 000 and received 9 million shares of stock. Starware now needs to raise a second round of​ capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $ 1.40 million and wants to own 11 % of the company after the investment is completed. a. How many shares must the venture capitalist receive to...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested $ 800 000 and received 8 million shares of stock. Starware now needs to raise a second round of​ capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $ 1.00 million and wants to own 20 % of the company after the investment is completed. a. How many shares must the venture capitalist receive to...
Three years​ago,you founded Outdoor​Recreation,Inc., a retailer specializing in the sale of equipment and clothing for recreational...
Three years​ago,you founded Outdoor​Recreation,Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as​camping,skiing, and hiking. So​far,your company has gone through three funding​rounds: Round       Date Investor Shares Share Price​ ($) Series A Feb. 2002 You                          600,000 Series B Aug. 2003 Angels 1,300,000 Series C Sept. 2004 Venture Capital       2,300,000 It is currently 2012 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO....
Starware Software was founded last year to develop software for gaming applications. The founder initially invested...
Starware Software was founded last year to develop software for gaming applications. The founder initially invested $ 1 comma 000 comma 000 and received 12 million shares of stock. Starware now needs to raise a second round of​ capital, and it has identified a venture capitalist who is interested in investing. This venture capitalist will invest $ 1.20 million and wants to own 17 % of the company after the investment is completed. a. How many shares must the venture...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT