Initial Setup and Series A NewCo has a pre?money valuation of $12 million. Combined, the founder...

Initial Setup and Series A NewCo has a pre?money valuation of $12 million. Combined, the founder shares and employee options pool total 9 million shares. NewCo seeks a $6 million Series A investment, for which investors receive shares of preferred stock that are convertible to shares of common stock.

Q1: What is the price per share at this time?

Q2: How many shares of preferred stock do the Series A investors receive?

Q3: What is the conversion price? (i.e., when converting a share of preferred stock into common stock, how many shares of common stock does the Series A investor get, and what is its value?)

Q4: What is the total equity stake of the Series A investors?

Q5: What is the total equity stake of the founders & employee options?

Scenario 3: Anti?Dilution Protection Series A investors negotiated broad?based weighted average conversion price protection. The company seeks $8M, and Series B investors demand 8M shares.

Q16: What is the conversion price of Series A investor shares immediately after the B?round?

Q17: What is the total equity stake of the Series B investors?

Q18: What is the total equity stake of the Series A investors?

Q19: What is the total equity stake of the founders & employee options?

Expert Solution

jeff jeffy answered 2 years ago

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