Explain the difference between fully diluted and primaryshares.
You invest $10,000 to start a company and issue yourself 100,000shares. A year later you raise
$1,000,000 from Firm A according to a pre-money valuation of$5,500,000. Following that
investment, some of your friends are interested in participatingand you issue them 2% of the
company when they invest $200,000.
What was Firm A’s price per share?
What is the post-money after Firm A’s investment?
Assuming your friends do invest, how many shares would they beissued?
What is the new price per share according to your friends’investment?
How many shares are issued in total?
For the friend round:
Pre-money: ______________
Post-money: _____________
After the friend round, what does the cap table look like?
