6. Pre-Financing Post-Financing Security # of Shares % # of Shares % Common-Founders 7,750,000 77.5 7,750,000 51.7 Common Employee Stock Pool 2,250,000 22.5 2,250,000 15.0 Issued 300,000 3.0 300,000 2.0 Unissued 1,950,000 19.5 1,950,000 13.0 Series A Preferred 0 0.0 5,000,000 33.3 Total 10,000,000 100 15,000,000 100 Series A VC specified the following security in the term sheet. "PCPC with participation as-if 5M shares of common, with liquidation return capped at four times OPP, and with the liquidation preference of 1X." A. Show the exit diagram with all values indicated in the diagram, i.e., inflection point when slope changes and conversion conditions. Show what x-axis and y-axis represent. B. suppose the portfolio company is acquired at an exit value of $35M. How much is the share of founder and Series A investor?

Quickbooks Online Accounting
3rd Edition
ISBN:9780357391693
Author:Owen
Publisher:Owen
Chapter6: Investing And Financing Activities
Section: Chapter Questions
Problem 1.5C
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6.
Pre-Financing
Post-Financing
Security
# of Shares
%
# of Shares
%
Common-Founders
7,750,000
77.5
7,750,000
51.7
Common Employee Stock Pool
2,250,000
22.5
2,250,000
15.0
Issued
300,000
3.0
300,000
2.0
Unissued
1,950,000
19.5
1,950,000
13.0
Series A Preferred
0
0.0
5,000,000
33.3
Total
10,000,000
100
15,000,000
100
Series A VC specified the following security in the term sheet. "PCPC with participation as-if
5M shares of common, with liquidation return capped at four times OPP, and with the liquidation
preference of 1X."
A. Show the exit diagram with all values indicated in the diagram, i.e., inflection point when
slope changes and conversion conditions. Show what x-axis and y-axis represent.
B. suppose the portfolio company is acquired at an exit value of $35M. How much is the
share of founder and Series A investor?
Transcribed Image Text:6. Pre-Financing Post-Financing Security # of Shares % # of Shares % Common-Founders 7,750,000 77.5 7,750,000 51.7 Common Employee Stock Pool 2,250,000 22.5 2,250,000 15.0 Issued 300,000 3.0 300,000 2.0 Unissued 1,950,000 19.5 1,950,000 13.0 Series A Preferred 0 0.0 5,000,000 33.3 Total 10,000,000 100 15,000,000 100 Series A VC specified the following security in the term sheet. "PCPC with participation as-if 5M shares of common, with liquidation return capped at four times OPP, and with the liquidation preference of 1X." A. Show the exit diagram with all values indicated in the diagram, i.e., inflection point when slope changes and conversion conditions. Show what x-axis and y-axis represent. B. suppose the portfolio company is acquired at an exit value of $35M. How much is the share of founder and Series A investor?
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