Your​ start-up company needs capital. Right​ now, you own 

100 %100% 

of the firm with 

10.0710.07 

million shares. You have received two offers from venture capitalists. The first offers to invest 

​$2.922.92 

million for 

1.121.12 

million new shares. The second offers 

$ 2.01$2.01 

million for 

525 comma 000525,000 

new shares.

**a.** What is the first​ offer's post-money valuation of the​ firm?

**b.** What is the second​ offer's post-money valuation of the​ firm?

**c.** What is the difference in the percentage dilution caused by each​ offer?

**d.** What is the dilution per dollar invested for each​ offer?

Question content area bottom

Part 1

**a.** What is the first​ offer's post-money valuation of the​ firm?

The first​ offer's post-money valuation will be 

​$enter your response here. 

 ​(Round to the nearest​ dollar.)

Let's break this problem down step by step.

### **a. First Offer's Post-Money Valuation**

The **post-money valuation** is the value of the company **after** the venture capitalist's investment. It's calculated using the total number of shares in the company after the investment.

We know:
- The venture capitalist will invest **$2.92 million**.
- The venture capitalist will receive **1.12 million new shares**.
- Currently, there are **10.07 million shares** in the company.

#### Steps:
1. After the investment, the total number of shares will be:
   \[
   \text{Total shares} = \text{Existing shares} + \text{New shares}
   \]
   \[
   \text{Total shares} = 10.07 \, \text{million} + 1.12 \, \text{million} = 11.19 \, \text{million shares}
   \]

2. The price per share, after the investment, is given by:
   \[
   \text{Price per share} = \frac{\text{Investment amount}}{\text{New shares}}
   \]
   \[
   \text{Price per share} = \frac{2.92 \, \text{million}}{1.12 \, \text{million}} = 2.6071 \, \text{dollars/share}
   \]

3. The post-money valuation is the price per share multiplied by the total number of shares:
   \[
   \text{Post-money valuation} = \text{Price per share} \times \text{Total shares}
   \]
   \[
   \text{Post-money valuation} = 2.6071 \times 11.19 \, \text{million} = 29.1879 \, \text{million dollars}
   \]

   **Post-money valuation (rounded to nearest dollar):**  
   \[
   \boxed{29,188,000} \, \text{dollars}
   \]

---

Would you like me to move to part **b** or provide further clarification? Also, here are 5 related questions you could explore:

1. What is pre-money valuation, and how is it related to post-money valuation?
2. How does share dilution affect existing shareholders?
3. What are the risks of venture capital investment in startups?
4. How can a company negotiate better terms with venture capitalists?
5. How does issuing new shares affect a company’s stock price?

**Tip:** Always consider both the percentage dilution and the valuation terms when evaluating investment offers!

Your start-up company needs capital. Right now, you own 100% of the firm with 10.07 million shares. You have received two offers from venture capitalists. The first offers to invest $2.92 million for 1.12 million new shares. The second offers $2.01 million for 525,000 new shares. a. What is the first offer's post-money valuation of the firm? b. What is the second offer's post-money valuation of the firm? c. What is the difference in the percentage dilution caused by each offer? d. What is the dilution per dollar invested for each offer?

Explore how to calculate post-money valuation and share dilution with two venture capital offers. This guide covers investment analysis, dilution percentages, and formulas for determining post-money valuation in the context of business financing.

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