needhelp1700

job71188 Wrote:
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> I don't think it's that hard. Example:
>
> Let's say VC thinks firm will be worth $50MM at
> termination in year 5 and wants to invest $5MM
> now. Also, in year 3, a second round of financing
> will come in for $2MM. The discount rate for the
> first 3 years is 40%, and 30% for the last two
> years. What is the post investment valuation after
> both rounds, and what % and how many shares do
> they own after each round?
>
> Oh and owner wants to have 1,000,000 shares.
>
> To get post investment after 2nd round=
> $50/(1.30)^2 = 29.58
> Preinvestment at year 3 = 29.58 - 2 = 27.58
> Post investment Year = = 27.58/(1.40)^3 = 10.05
>
> % owned by first round VC investor = $5 / $10.05 =
> 49.76%
>
> Shares owned by first investor = 1,000,000 *
> (1/1-.4976) -1,000,000 = 990,445
> Price per share = $5,000,000 / 990,445 = $5.05
>
> Now for 2nd round stuff:
> % owned by 2nd round investor = $2,000,000 /
> $29,580,000 = 6.76%
> Total shares at this point = Original Total Shares
> / (1 - 2nd Round Ownership) = 1,990,445 /
> (1-.0676) = 2,134,785 shares
>
> Price per share = $29,580,000 / 2,134,785 =
> $13.86
>
> % owned by first round = (1 - 2nd round
> ownership)*(original ownership) = (1-.0676)*.4976
> = 46.39%
>
>
> Took me 5 minutes and I was making the example up
> as I was going

After looking through this, it seems doable. Probably would save it for the end though.

NO EXCUSES