Question

"You founded your firm with a contribution of $600,000, receiving 3,000,000 shares of stock. Since then, you sold 12,000,000 stocks to Angel Investors. Now you are considering raising more capital from a Venture Capitalist. They will invest $4,000,000 and would receive 90,000,000 newly issued shares. What is the post-money valuation? Express the terms of your answer completely and in strictly numerical terms. For example: If your answer is one million dollars, write: 1000000."

Answer 1

The post-money valuation is calculated by adding the amount of money received from stock sales to the market capitalization. The specific stock price is needed to determine the numerical value.

Step-by-step explanation:

The post-money valuation of a firm is calculated by adding the amount of money the firm has received from stock sales to its market capitalization, which is the product of the stock price and the total number of shares outstanding. In this case, the firm initially received $600,000 from the founder's contribution and sold 12,000,000 shares to angel investors. The firm is now raising $4,000,000 from a venture capitalist in exchange for 90,000,000 new shares. The post-money valuation is therefore calculated as follows:

Market Capitalization = (Initial Shares + Angel Investor Shares + Venture Capitalist Shares) * Stock Price = (3,000,000 + 12,000,000 + 90,000,000) * Stock Price

Post-Money Valuation = Market Capitalization + Amount from Stock Sales = (3,000,000 + 12,000,000 + 90,000,000) * Stock Price + $4,000,000

Since the exact stock price is not provided, the calculation cannot be performed to provide a numerical value for the post-money valuation.