Venture is formed with 2000000 shares held by founders new


VALUATION – ONE ROUND

Venture is formed with 2,000,000 shares held by founders. New investor contributes $1M to venture. Exit time is in 5 years. Investor demands 50% annualized return. Venture income of $1,000,000 @ exit. A similar venture recently sold shares to the public for $20M with venture earnings of $2M.

a) What is the ownership of the VC?

b) How many shares will be issued for VC?

c) What is the issue share price?

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Financial Management: Venture is formed with 2000000 shares held by founders new
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