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Starware Software was founded last year to develop software for gaming applications. The founder initially invested...

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Finance

Starware Software was founded last year to develop software forgaming applications. The founder initially invested $ 800,000 andreceived 8 million shares of stock. Starware now needs to raise asecond round of​ capital, and it has identified a venturecapitalist who is interested in investing. This venture capitalistwill invest $ 1.00 million and wants to own 20 % of the companyafter the investment is completed.

a. How many shares must the venture capitalist receive to end upwith 20 % of the​ company? What is the implied price per share ofthis funding​ round?

b. What will the value of the whole firm be after thisinvestment​ (the post-money​ valuation)?

a. How many shares must the venture capitalistreceive to end up with 20 % of the​ company? What is the impliedprice per share of this funding​ round?

The venture capitalist will receive _____ million shares. ​(Round to three decimal​ places.)

The implied price per share is ​$____per share.  ​(Round to thenearest​ cent.)

b. What will the value of the whole firm beafter this investment​ (the post-money​ valuation)? The value ofthe firm will be ​$____million. ​ (Round to three decimal​places.)

Answer & Explanation Solved by verified expert
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Answer a The founder initially invested 800000 and received 8 million shares of stock This venture capitalist will invest 100 million and wants to own 20 of the company after the investment is completed If    See Answer
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