PART 1

a.

NI Y5
MM
EV
IRR required
0
(5,000,000.00)
5,000,000.00
Require

b.

Pre shares
Post shares
Shares acquired

c.

NI Y5
X PE
MV
IRR required
0
(12,000,000.00)
12,000,000.00
Require

e.

5000000
20
100,000,000.00
50%
1
7,500,000.00

1,000,000.00
1,612,090.68
612,090.68
5000000
20
100000000
50%
1
18,000,000.00

2
27,000,000.00

91% of the company

1,000,000.00
11,267,605.63
10,267,605.63

Mgmt Reserve %
NI Y5
X PE
MV
IRR required

15%
5,000,000.00
20
85,000,000.00
50%

Require

11,250,000.00

38% of the company

Pre shares
Post shares
Shares acquired

0
(5,000,000.00)
5,000,000.00

1
7,500,000.00

2
11,250,000.00

44.6691176% of the company

PART 2
a.

NI Y5
MM
EV
IRR required
0
(5,000,000.00)
5,000,000.00
Require

5,000,000.00
20
100,000,000.00
50%

95,000,000.00

1
7,500,000.00

2
11,250,000.00

35% of the company

b.

Pre shares
Post shares
Shares acquired

c.

Samantha's risk would decrease while reward would increase when it co

The opposite holds true for John. As Samantha's proposal of participating
If
EV Down
EV Up

1,000,000.00
1,531,486.15
531,486.15

Participating Prefe
50,000,000.00 Down
200,000,000.00 Up

PART 3
a.

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

Require
Pre shares
Post shares
Shares acquired
b.

Mgmt Reserve %

15%
5,000,000.00
20
78,409,000.00
50%
30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

48.4239692% of the company

1,000,000.00
1,938,885.15
938,885.15
15%

NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

c.

1
7,500,000.00

2
11,250,000.00
3,000,000.00

Require

7.7541176% of the company

Pre shares
Post shares
Shares acquired

1,938,885.15
2,101,866.33
162,981.19

Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

Investor Y1
w/o dilution
w/o 2nd round

5,000,000.00
20
85,000,000.00
50%
30%

Require
Pre shares
Post shares
Shares acquired
Mgmt Reserve %
NI Y5
X PE
MV
IRR required Y1
IRR required Y3
0
(5,000,000.00)
5,000,000.00

15%
5,000,000.00
20
100,000,000.00
50%
30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

37.9687500% of the company

1,000,000.00
1,612,090.68
612,090.68
15%
5,000,000.00
20
100,000,000.00
50%
30%
1
7,500,000.00

2
11,250,000.00
3,000,000.00

Investor Y1
w/o dilution

Require

6.5910000% of the company

Pre shares
Post shares
Shares acquired

1,612,090.68
1,725,840.85
113,750.17

3
16,875,000.00

Post equivalent
Post equivalent
Price/share

4
25,312,500.00

5
37,968,750.00
37,968,750.00

62%
100%
8.1687242798

3
40,500,000.00

Post equivalent
Post equivalent
Price/share

4
60,750,000.00

Remainder

5
91,125,000.00
91,125,000.00

9%
100%
1.17

3
16,875,000.00

4
25,312,500.00

Remainder

5
37,968,750.00
37,968,750.00

3
16,875,000.00

Post equivalent
Post equivalent
Price/share

4
25,312,500.00

5 5 after 5m return
37,968,750.00
32,968,750.00
37,968,750.00

65%
100%
9.4075829384

Remainder

uld increase when it comes to the downside and decrease when it comes to the upside in comparis
proposal of participating preferred stock indiciates that she feels the need for protection in case of d
35%
20,616,776.32
72,672,697.37

3
(3,000,000.00)
16,875,000.00
3,900,000.00

Post equivalent
Post equivalent
Price/share

Common
Down
Up

4
25,312,500.00
5,070,000.00

52%
100%
5.3254650206

38%
18,984,375.00
75,937,500.00

5
37,968,750.00
37,968,750.00
6,591,000.00

Remainder

3
(3,000,000.00)
16,875,000.00
3,900,000.00

Post equivalent
Post equivalent
Price/share

3
(3,000,000.00)
16,875,000.00
3,900,000.00

Post equivalent
Post equivalent
Price/share

3
(3,000,000.00)
16,875,000.00
3,900,000.00

4
25,312,500.00
5,070,000.00

5
37,968,750.00
37,968,750.00
6,591,000.00

92%
100%
18.4070323168

4
25,312,500.00
5,070,000.00

Remainder

5
37,968,750.00
37,968,750.00
6,591,000.00

62%
100%
8.1687242798

4
25,312,500.00
5,070,000.00

Remainder

5
37,968,750.00
37,968,750.00
6,591,000.00

Post equivalent
Post equivalent
Price/share

93%
100%
26.3735868514

Remainder

38%

91%

35%

to the upside in comparison to common stock in Part 1.

for protection in case of downside, John might regard it as insufficient trust in his company and its p

48%

8%

t in his company and its projections.

1 Initial shares
New shares A
Price/share A
Pre-money B
Post-money B
Pre-money shares
Price/share pre-B
Series B
Post-money shares
Price/share B
New shares B

15,000,000.00
10,000,000.00
1.00
15,000,000.00
20,000,000.00
25,000,000.00
0.60
5,000,000.00
33,333,333.33
0.60
8,333,333.33

2 Shares if same price/share

Price/share B
Total shares A
New shares A
Total shares I
New shares I
Conversion Rate

30,000,000.00
0.90
11,111,111.11
1,111,111.11
16,666,666.67
1,666,666.67
1.11

3 Total shares A+I

New shares A+I
Conversion Rate

41,666,666.67
16,666,666.67
1.67

VC Val
Shares
Price/share

4,000,000.00
5,000,000.00
0.80

Entrepreneur
Shares
Price/share

5,000,000.00
5,000,000.00
1