Question

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 $ 1.60 million and wants to own 35 % of the company after the investment is completed. a. How many shares must the venture capitalist receive to end up with 35 % 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)? a. How many shares must the venture capitalist receive to end up with 35 % of the​ company? What is the implied price per share of this funding​ round

Homework Answers

Answer #1

a). Post money valuation = investment amount/share = 1.60/0.35 = 4.57 million

Pre money valuation = post money valuation - investment amount

= 4.57 -1.60 = 2.97 million

Price per share = pre money valuation/existing number of shares = 2.97/12 = 0.2476 per share

The 35% stake will be picked up at this price, so number of shares issued = investment amount/price per share

= 1.60/0.2476 = 6.462 million

b). Implied price per share = 0.2476 per share

c). Post money valuation = 4.57 million

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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...
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...
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%...
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 $10000000 and would receive 4000000 newly issued shares. 1. What is the post-money valuation? 2. If this is the VC's first investment in the company, what percentage of the firm will they end up owning? 3. If this is the VC's first investment...
Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment...
Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your company has gone through three funding rounds: Round Date Investor Shares Share Price ($) 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...
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...
AshlandTeck, Inc., a 2-year old start-up company headquartered in San Francisco and specializing in GPS software...
AshlandTeck, Inc., a 2-year old start-up company headquartered in San Francisco and specializing in GPS software development, has outstanding 400 shares of $100 par value common stock, which has been issued and sold at $105 per share for a total of $42,000. The State of Delaware, where AshlandTeck is incorporated, has adopted the earned surplus test for all distributions. AshlandTeck is aggressively courting a multi-million-dollar venture capital investment from Angel Capital Investors, LLP, to commercialize a number of patents that...
13 As an auditor, you are asked to verity the financial statements of a corporation. If...
13 As an auditor, you are asked to verity the financial statements of a corporation. If a company declares that its return on equity is 18 percent, its sales are $4 million, its debt ratio is 0.40 and its total liabilities are $2 million, what should its return on total assets be? Assume the company has no preferred shares A) 0.80% B) 1.25% C) 10.80% D) 12.60 % E) There is insufficient information to answer Answer : 10.80% 9 Your...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Suppose that the time (in hours) that Irene spends on an untimed final exam follows an...
    asked 12 minutes ago
  • The following sample observations were randomly selected. (Round intermediate calculations and final answers to 2 decimal...
    asked 25 minutes ago
  • what type of graph is best suitable for data obtained from customer ratings. The ratings are...
    asked 29 minutes ago
  • Determine the cumulative 15-year 18 kip ESAL’s in the design lane for 2-lane highway for the...
    asked 36 minutes ago
  • Q: Dr.Grimace, the evil dentist, is trying to find out if his patients suffer from periodontal...
    asked 36 minutes ago
  • After collecting data on 19283 dogs, you find that male vallhunds have an average weight of...
    asked 38 minutes ago
  • Research Target Corporation and assess your satisfaction with the company you researched and make recommendations about...
    asked 39 minutes ago
  • Evidence suggests that 70% of FSU students like turtles. Suppose we randomly sampled 15 FSU students....
    asked 39 minutes ago
  • Ulrich challenges the appropriateness of the nearly universal symbolism of the spinning wheel as the marker...
    asked 40 minutes ago
  • Differential Equations: Please try to computer type, if not possible be clear and organize. Thank you...
    asked 40 minutes ago
  • In your opinion, what are the three (3) most important benefits an employer can give to...
    asked 46 minutes ago
  • In a test of the effectiveness of garlic for lowering​ cholesterol, 81 subjects were treated with...
    asked 49 minutes ago