Notes

📖 Berk, DeMarzo and Harford Chap. 14

Post money valuation

✏️ You firm currently has $.55M$ shares outstanding. The angel investor paid $5 per share and the first round of VC paid $12 per share. The firm is on hard times and is reaching out to another VC that will inject $\$15M$ and is asking for $1M$ shares.

What is the post money valuation?

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The last investor’s price is $\frac{\$15M}{1M\;Shares} = \$15$ per share.

There are now $1M + .55M = 1.55M$ shares outstanding

Based on the price the last investor paid, your new market cap/company value is:
$= 1.55M \times \$15 = \$23.25 Million$