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Homework answers / question archive / You started a venture 2 years ago with $400,000 dollars and own 60% of the 500,000 shares issued
You started a venture 2 years ago with $400,000 dollars and own 60% of the 500,000 shares issued. What is the pre and post money valuations under each deal offered: Alpha Ventures offers $200,000 for 20% of the firm • Beta Ventures offers $400,000 for 600,000 new shares • Kappa Ventures offers $200,000 for 100,000 existing shares
From Question 8 above, what is the pre money valuation from Alpha Ventures?
From Question 8 above, what is the the pre money valuation from Beta Ventures?
From Question 8 above, what is the pre money valuation from Kappa Ventures?
ANSWER -
Pre money valuation = $400,000 / 60% = 400,000 / 0.6 = $666,666.67
Post money valuation = Amount invested / % investor receives
$200,000 for 20% of the firm
Post money valuation = 200,000 / 0.2 = $1,000,000
$400,000 for 600,000 new shares
Total number of shares after the deal = 600,000 + 500,000 = 1,100,000
% of the company for 600,000 shares = 600,000 / 1,100,000 = 54.545%
Post money valuation = 400,000 / 0.54545 = $733,333.33
$200,000 for 100,000 existing shares
% of the company for 100,000 shares = 100,000 / 500,000 = 20%
Post money valuation = 200,000 / 0.2 = $1,000,000
