Given the following information about a potential investment in a startup:
Investment = 50 million
Equity = 25%
Liquidation rights = 1x
Calculate:
Implied valuation of the company, pre- and post- money
Upon liquidation, payoff for founders and investors under the scenarios of liquidation values for each type of equity investment.
Effective share (%) that the founders and investors get from the liquidation in each case.
What happens if liquidation preference is 2x ? (answer all of the above in this case)
Possible terms for the equity investment (types of equity offered to investors, given that founders will always get common stock):
Common stock
Convertible, preferred, non-participating stock
Convertible, preferred, participating stock
Scenarios of liquidation values:
25 million
100 million
300 million