Question

Suppose the following balance sheet for Uber after second round of venture financing Second Stage Market Value Balance Sheet (Smil) Assets Liabilities and Equity Cash from new Equity Fixed Assets $4.00 Equity From 2nd stage $2.00 Equity From 1st stage $14.00 Your original Equity $6.00 $8.00 $6.00 Other Assets Total $20.00 $20.00 Suppose Uber is able to convince the investors that there's a big market for the product and big bucks to be made in the market. Now let's assume that new investors decide to invest $20 million and require 20% of the company. a. What will be the total value of the company after this new round of financing $100,000,000 b. What will be the equity for the 1st stage investor c. What will be the equity for the 2nd stage Investor d. What will be the amount of equity for the original investor

Answer 1

a. total value of the company after new round of financing = $20,000,000/0.20 = $100,000,000

$20 million for 20%. so we calculated above value for 100%.

b. earlier 1st stage investor had equity of $8/$20 = 40% of original equity. now new remaining equity is: $100,000,000 - $20,000,000 = $80,000,000

the equity for the 1st stage investor = $80,000,000*40% = $32,000,000

c. earlier 2nd stage investor had equity of $6/$20 = 30% of original equity. now new remaining equity is: $100,000,000 - $20,000,000 = $80,000,000

the equity for the 2nd stage investor = $80,000,000*30% = $24,000,000

d. earlier original investor had equity of $6/$20 = 30% of original equity. now new remaining equity is: $100,000,000 - $20,000,000 = $80,000,000

the equity for the original investor = $80,000,000*30% = $24,000,000