Problem 23-5 on Preferred Stock based on Chapter 23 Raising Equity Capital
Three years ago, you founded your own company. You invested $100,000 of your money and received 5 million shares of Series A preferred stock. Since then, your company has been through three additional rounds of financing.
Round
Price ($)
Number of Shares
Series B
0.50
1,000,000
Series C
2.00
500,000
Series D
4.00
500,000
a. What is the pre–money valuation for the Series D funding round?
b. What is the post–money valuation for the Series D funding round?
c. Assuming that you own only the Series A preferred stock (and that each share of all series of preferred stock is convertible into one share of common stock), what percentage of the firm do you own after the last funding round?
