Question

A founder finds it difficult to raise capital, so when he brings in his first outside investor, the investor obtains a full ratchet provision on his equity. The investor invests $400,000 for 400,000 shares of the company. The founder holds 1,000,000 shares of the company. In the next round of financing, the company needs $550,000 and the post-money value of the company is $1,550,000. What is the price per share expected to be in the next round of financing?

Name: a founder finds it difficult to raise capital so when he brings in his first outside investor the investor obtains a full ratchet provision on his equity investor who invests 400000 for 4000 50602
Uploaded: 2023-02-07T16:41:23-08:00
Duration: 1 min 9 s
Channel: Sri K
Description: a founder finds it difficult to raise capital so when he brings in his first outside investor the investor obtains a full ratchet provision on his equity investor who invests 400000 for 4000 50602

          A founder finds it difficult to raise capital, so when he brings in his first outside investor, the investor obtains a full ratchet provision on his equity. The investor invests $400,000 for 400,000 shares of the company. The founder holds 1,000,000 shares of the company.

In the next round of financing, the company needs $550,000 and the post-money value of the company is $1,550,000.

What is the price per share expected to be in the next round of financing?

Added by John Y.

Calculus: Early Transcendentals

James Stewart 8th Edition

Instant Answer

Solved by Expert Sri K

02/07/2023

Step 1

The founder holds 1,000,000 shares, and the investor holds 400,000 shares. Therefore, the total number of shares is: \[ 1,000,000 + 400,000 = 1,400,000 \text{ shares} \] Show more…

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A founder finds it difficult to raise capital, so when he brings in his first outside investor, the investor obtains a full ratchet provision on his equity. The investor invests $400,000 for 400,000 shares of the company. The founder holds 1,000,000 shares of the company. In the next round of financing, the company needs $550,000 and the post-money value of the company is $1,550,000. What is the price per share expected to be in the next round of financing?