Assume Conversion Rate is 1:1
Initial Setup and Series A NewCo has a pre?money valuation of $12 million. Combined, the founder shares and employee options pool total 9 million shares. NewCo seeks a $6 million Series A investment, for which investors receive shares of preferred stock that are convertible to shares of common stock.
1. What is the price per share at this time?
2. How many shares of preferred stock do the Series A investors receive?
3. What is the conversion price? (i.e., when converting a share of preferred stock into common stock, how many shares of common stock does the Series A investor get, and what is its value?)
4. What is the total equity stake of the Series A investors?
5. What is the total equity stake of the founders & employee options?
Scenario 3: Anti?Dilution Protection Series A investors negotiated broad? based weighted average conversion price protection. The company seeks $8M, and Series B investors demand 8M shares.
1. What is the conversion price of Series A investor shares immediately after the B?round?
2. What is the total equity stake of the Series B investors?
3. What is the total equity stake of the Series A investors?
4. What is the total equity stake of the founders & employee options?