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    sss222's Avatar
    sss222 Posts: 1, Reputation: 1
    New Member

    Nov 6, 2010, 11:11 PM
    venture capital valuation method
    The VC called MIT is considering a $5M first round investment in ABC company. MIT proposed to invest 5M convertible preferred stock. The founder of ABC currently holding 10M common stock. Following the first investment ABC will have 10M outstanding common shares. Successful exit in 5 years with multile exit 10x sales. The cost of capital of MIT is 25%.
    Calculated the expected sales in year 5, (use venture capital valuation method

    Please help.
    BizBlogBuzz's Avatar
    BizBlogBuzz Posts: 2, Reputation: 1
    New Member

    Nov 28, 2011, 12:05 PM
    10 * (1.25)^5 div 10 = sales in final year

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