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A startup initially has the following cap table Class Sha…

A startup initially has the following cap table Class Shares Percentage Founders 3,000,000 ? The company then goes through two rounds of funding: Series A: A VC invests $2 million at a $8 million pre-money valuation. Series B: Another VC invests $3 million at a $15 million pre-money valuation. Calculate the founders’ ownership percentage after both Series A and Series B funding rounds.

The company is seeking an infusion of $5 million to carry it…

The company is seeking an infusion of $5 million to carry it to the next milestone. The company has a prototype of a device for using ultrasound to shatter kidney stones. The $5 million is needed to complete the testing required for FDA approval. An investor is proposing to provide the capital in exchange for 2 million shares of common stock. Alternatively, the investor will accept 1.8 million shares of preferred stock, convertible to common on a 1 for 1 basis, or the investor will accept 1.5 million convertible preferred shares, along with warrants to acquire an additional 1.5 million shares for a nominal price. The warrants can only be exercised if the venture fails to achieve the revenue level projected by the entrepreneur two years after the investment. In any case, the entrepreneur owns 2.5 million shares of common stock of a biotech company. Compute the pre- and post-money valuations for each scenario, assuming the best-case valuation.  Scenario 1: $5 million for 2 million shares of common stock [A] Scenario 2: $5 million for 1.8 million shares of preferred stock convertible to common stock for the ratio of 1:1 [B] Scenario 3: $5 million for 1.5 million shares of preferred stock convertible to common stock and a warrant for 1.5 million shares of common stock [C]