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Rob's 2700 Notes

👨‍🏫 Notes

📖 Berk, DeMarzo and Harford Chap. 14

A table listing all of the formulas in my formula sheet that are relevant to Equity Financing. You can find the full formula sheet at https://robmunger.com/2700share A table showing IPO shares bid based on the price.

Post money valuation

Section titled “ Post money valuation”

✏️ You firm currently has .55M.55M shares outstanding. The angel investor paid $5 per share and the first round of VC paid $12 per share. The firm is on hard times and is reaching out to another VC that will inject $15M\$15M and is asking for 1M1M shares.

What is the post money valuation?

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The last investor’s price is $15M1M  Shares=$15\frac{\$15M}{1M\;Shares} = \$15 per share.

Company Value = Outstanding shares * last investors price

There are now 1M+.55M=1.55M1M + .55M = 1.55M shares outstanding

Based on the price the last investor paid, your new market cap/company value is:
=1.55M×$15=$23.25Million= 1.55M \times \$15 = \$23.25 Million