NewCo needs to raise $1 million in funding.
If the company is valued at $2 million, how much of the company do they need to sell to raise the $1 million?
The company founders currently hold 100,000 shares of stock in the company, and early investors hold another 200,000 shares.
i. Prior to the new investment, how much is each share of the company worth?
ii. How many new shares will the company need to issue in order to raise the $1 million?
iii. The company valuation of $2 million is called a “pre-money” valuation. After the new shares are issued and the $1 million is in the company’s bank account, how much will it be worth?
iv. Given your answer to iii, how much will each share be worth?