Dan and Tina bootstrap their food product business with some recipes from Tina's grandmother, agreeing to split the company 50/50. They raise money in a hot market and get a pre-money valuation for $15 million. Two venture capital firms split the Series A round of $20 million and ask the founders to set aside an option pool of 20%. They do not get their products into the markets they want as quickly as they had hoped and they ran into production problems. Running short of money they have to raise another $20 million and they hope this is all they have to raise before they can finance growth out of cash flow and debt. They have firm commitments for large orders from Kroger and Costco. But this time the capital market is very tight and all they can find is money valued at their last round close. And to add more pain the new investors require that the option pool remain at 20%.
a. What is the post-money valuation after Series A?
b. What percentages do Dan and Tina have at that point?
c. What is the pre-money valuation of Series B?
d. Who has what share of the company at the close of Series B?