You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return.

Question

You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return.

The post-money valuation of your firm is closest to:

Answer 1

To calculate the post-money valuation of the firm, we need to consider the amount of money invested and the number of shares issued.

Initially, you contributed $200,000 and received 2 million shares. This implies that the initial valuation was $200,000 / 2 million shares = $0.10 per share.

You then sold an additional 1 million shares to angel investors. Since no new money was injected, this does not affect the overall valuation. So, the valuation remains at $200,000.

Now, a venture capital firm is investing $5 million and receiving 2 million newly issued shares. This implies that the new investment is valuing each share at $5 million / 2 million shares = $2.50 per share.

To find the post-money valuation, we add the new investment to the existing valuation. Post-money valuation = $200,000 + $5 million = $5.2 million.

Therefore, the post-money valuation of your firm is approximately $5.2 million.

12.5m

To calculate the post-money valuation of the firm, we need to consider the amount of money invested and the number of shares issued.