Assignment: Background information:
Assume you are an accredited investor according to SEC Reg D. Congratulations, you are part of the 1%. Assume you have a net worth of $20 million. Further assume you allocate 4% of your net worth to investments in early stage companies (start-ups). Still further, assume you have enough uncommitted cash in this allocation to invest in at least part of this deal if you choose to.
Input
1) Read the attached pitch for an investment in this real Seattle-based company, Lulabop.
a. Raising: $1.2 Million
b. Pre-money Value: $3.5 Million
c. Vehicle: Series a Preferred Equity
Output
Write a memo addressed to Mr. Charles Porteraddressing the following:
a) Identify the factors that would argue in favor of your investment.
b) Identify the factors that would argue against your investment.
c) What is your estimate of the real pre-money value of the company? For this part, you can choose to use any valuation method(s) we studied in class as you deem appropriate. You are encouraged to do independent research, for example, identifying comparable companies as Lulabop and retrieving their price multiples. You can also use the Kaufman valuation model, as long as you research on its proper application.
d) Taking these factors into account, how much would you invest in Lulabop? What percentage of the company would you own?
e) You may use any resources at your disposal EXCEPT, you may not contact the company or any of its executives or employees.
Also, research and answer the following:
a) What does it mean to be an SEC accredited investor?
b) What does it mean to qualify for 1244 treatment of your investment?
c) What does it mean to qualify for 1202 treatment of your investment?
Format your assignment according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.
Attachment:- Lulabop-Summary.rar