What percent of ownership must be sold to grant

Assignment Help Finance Basics

Reference no: EM133377138

Question: R.K. Maroon is a seed-stage web-oriented entertainment company with important intellectual property. RKM's founders, all technology experts in the relevant area, are anticipating a quick leap to dot-com fortune and believe that their unique intellectual property will allow them to achieve a $ 100,000,000 venture value in Year 3 with a one-time initial $2,000,000 in venture ?nancing.

The founders have organized RKM with 1,000,000 shares and are willing to "grant" venture investors a 100% return on their business plan projections.

a. What percent of ownership must be sold to grant" the 100% three-year return?

b. If the owners want to keep their 1,000,000 shares, how many new shares should they issue to the VCs

c. What would be the resulting ownership con?guration?

d. Suppose the venture investors do not approve the business plan predictions and want to price the deal assuming a second round in Year 2 of $8,000,000 with a 40% return I If the owners want to keep their 1,000,000 shares, how many new shares should they issue to the VCs for the second round of ?nancing? I What would be the new ownership con?guration?

Reference no: EM133377138

Questions Cloud

Explain how improved communication can resolve conflict : Explain how improved communication can resolve conflict, and strengthen interpersonal relationships.

What is the deposit multiplier what is the total decrease : What is the deposit multiplier? What is the total decrease in deposits in the banking system? What is the change in the money supply?

Explain the effectiveness of asset allocation with futures : Explain the effectiveness of Asset allocation with futures with 8 different examples both merits and demerits

What kind of monetary policy should the central bank follow : Suppose an economy is facing an inflationary gap. What kind of monetary policy should the Central Bank follow if it wants to control inflation?

What percent of ownership must be sold to grant : What percent of ownership must be sold to grant the 100% three-year return? b. If the owners want to keep their 1,000,000 shares, how many new shares should

Describe a dominant strategy. assuming that the game : Describe a dominant strategy. Assuming that the game described above is a one-shot simultaneous game, does Restaurant A have a dominant strategy in the game?

Identify metrics to help track each perspective : The first step in using a balanced scorecard is to identify metrics to help track each perspective.

Different training tools used at best buy : What are the advantages and disadvantages of the different training tools used at Best Buy?

Write down and reflect on a situation : Write down and reflect on a situation (either personal or professional) where you have acted on something that is legally permissible, but challenged your value

User Account

All Pages