You are an entrepreneur looking at accepting a venture capital investment of $5 million. The...
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You are an entrepreneur looking at accepting a venture capital investment of $5 million. The VC firm is asking for a 25% fully diluted ownership of the company, and in addition, wants the company to put in place a new option plan representing 10% of the fully diluted ownership of the company. The current and prospective new ownership is set forth below. Please fill out all of the missing items to analyze the ownership impact of the proposed investment.
Current Value (In thousands) Shares 1,000,000 100,000 Founders Existing Option Plan New Options Investor Percent 90.9% 9.1% 0.0% 0.0% Post Investment Shares Percent 1,000,000 100,000 10.0% 25.0% $ 5,000 Total 1,100,000 100.0% 100.0%
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