PART 1

a.

NI Y5
MM
EV
IRR required
0
(5,000,000.00)
5,000,000.00
Require

b.

Pre shares
Post shares
Shares acquired

c.

NI Y5
X PE
MV
IRR required
0
(12,000,000.00)
12,000,000.00
Require

e.

5000000
20
100,000,000.00
50%
1
7,500,000.00

1,000,000.00
1,612,090.68
612,090.68

16,875,000.00

Post equivalent
Post equivalent
Price/share

5000000
20
100000000
50%
1
18,000,000.00

2
27,000,000.00

3
40,500,000.00

91% of the company

1,000,000.00
11,267,605.63
10,267,605.63

Mgmt Reserve %
NI Y5
X PE
MV
IRR required

15%
5,000,000.00
20
85,000,000.00
50%

Require

11,250,000.00

38% of the company

Pre shares
Post shares
Shares acquired

0
(5,000,000.00)
5,000,000.00

Post equivalent
Post equivalent
Price/share

1
7,500,000.00

2
11,250,000.00

44.6691176% of the company

3
16,875,000.00

PART 2
a.

NI Y5
MM
EV
IRR required
0
(5,000,000.00)
5,000,000.00
Require

5,000,000.00
20
100,000,000.00
50%

95,000,000.00

1
7,500,000.00

2
11,250,000.00

3
16,875,000.00

35% of the company

b.

Pre shares
Post shares
Shares acquired

c.

Samantha's risk would decrease while reward would increase when it comes to the downside and de
The opposite holds true for John. As Samantha's proposal of participating preferred stock indiciates t
If
EV Down
EV Up

1,000,000.00
1,531,486.15
531,486.15

Post equivalent
Post equivalent
Price/share

Participating Preferred
35%
50,000,000.00 Down
20,616,776.32
200,000,000.00 Up
72,672,697.37

PART 3
a.

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

15%
5,000,000.00
20
78,409,000.00
50%
30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

Require

48.4239692% of the company

Pre shares

1,000,000.00

3
(3,000,000.00)
16,875,000.00
3,900,000.00

Post equivalent

b.

Post shares
Shares acquired

1,938,885.15
938,885.15

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3

15%
5,000,000.00
20
85,000,000.00
50%
30%

0
(5,000,000.00)
5,000,000.00

Require
Pre shares
Post shares
Shares acquired
c.

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

Investor Y1
w/o dilution
w/o 2nd round

Post equivalent
Price/share

1
7,500,000.00

2
11,250,000.00
3,000,000.00

7.7541176% of the company

1,938,885.15
2,101,866.33
162,981.19

Post equivalent
Post equivalent
Price/share

15%
5,000,000.00
20
100,000,000.00
50%
30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

Require

37.9687500% of the company

Pre shares
Post shares
Shares acquired

1,000,000.00
1,612,090.68
612,090.68

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1

3
(3,000,000.00)
16,875,000.00
3,900,000.00

15%
5,000,000.00
20
100,000,000.00
50%

3
(3,000,000.00)
16,875,000.00
3,900,000.00

Post equivalent
Post equivalent
Price/share

IRR required Y3
0
(5,000,000.00)
5,000,000.00
Investor Y1
w/o dilution

Require
Pre shares
Post shares
Shares acquired

30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

3
(3,000,000.00)
16,875,000.00
3,900,000.00

6.5910000% of the company

1,612,090.68
1,725,840.85
113,750.17

Post equivalent
Post equivalent
Price/share

4
25,312,500.00

5
37,968,750.00
37,968,750.00

62%
100%
8.16872428

4
60,750,000.00

25,312,500.00

38%

Remainder

91%

5
91,125,000.00
91,125,000.00

9%
100%
1.17

Remainder

5
37,968,750.00
37,968,750.00

4
25,312,500.00

5 5 after 5m return
37,968,750.00 32,968,750.00
37,968,750.00

65%
100%
9.407582938

Remainder

35%

rease when it comes to the downside and decrease when it comes to the upside in comparison to common stock in Part 1.
al of participating preferred stock indiciates that she feels the need for protection in case of downside, John might regard it as insufficient
Common
Down
Up

4
25,312,500.00
5,070,000.00

52%

38%
18,984,375.00
75,937,500.00

5
37,968,750.00
37,968,750.00
6,591,000.00

Remainder

48%

100%
5.325465021

4
25,312,500.00
5,070,000.00

5
37,968,750.00
37,968,750.00
6,591,000.00

92%
100%
18.40703232

4
25,312,500.00
5,070,000.00

62%
100%
8.16872428

Remainder

5
37,968,750.00
37,968,750.00
6,591,000.00

Remainder

8%

4
25,312,500.00
5,070,000.00

93%
100%
26.37358685

5
37,968,750.00
37,968,750.00
6,591,000.00

Remainder

rison to common stock in Part 1.

of downside, John might regard it as insufficient trust in his company and its projections.

1 Initial shares
New shares A
Price/share A
Pre-money B
Post-money B
Pre-money shares
Price/share pre-B
Series B
Post-money shares
Price/share B
New shares B

15,000,000.00
10,000,000.00
1.00
15,000,000.00
20,000,000.00
25,000,000.00
0.60
5,000,000.00
33,333,333.33
0.60
8,333,333.33

2 Shares if same price/share

Price/share B
Total shares A
New shares A
Total shares I
New shares I
Conversion Rate

30,000,000.00
0.90
11,111,111.11
1,111,111.11
16,666,666.67
1,666,666.67
1.11

3 Total shares A+I

New shares A+I
Conversion Rate

41,666,666.67
16,666,666.67
1.67

VC Val
Shares
Price/share

4,000,000.00
5,000,000.00
0.80

Entrepreneur
Shares
Price/share

5,000,000.00
5,000,000.00
1