You Founded Your Own Firm Three Years Ago

question 91

Multiple Choice

You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 3 million shares of stock. Since then, you have sold an additional 2 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 4 million newly issued shares in return. Suppose you sold the 2 million shares to the angel investor for $500,000. What was the post-money valuation of your shares immediately following the angel investor's investment?

• A) $500,000
• B) $0.75 million
• C) $1.5 million
• D) $1.9 million

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Definitions:

Paraphrase

Restating text or speech using different words, especially to achieve clearer meaning.

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To acknowledge or reference the source of information or ideas used in academic or research work.

Erik Erikson

A developmental psychologist known for his theory of psychosocial development, which outlines eight stages of psychological growth from infancy to adulthood.

Misrepresenting

The act of giving a false or misleading account of the nature of something, often to deceive or mislead.