Spiffy

SpiffyTerm. Inc
COMM 486X

Question 1
1a. These Assumptions produce Round 1 Pre Money Valuation of 13.1 Mil and Post Money of 17.1; and round two Pre money Valuation of 36 Mil and Post Money Valuation of 38 Mil.
1b. For the different scenarios, and sensitivity analysis, please see below:

Investment
Pre Money
Post Money
First Round
$4,000,000
$12.7 Mil
$16.7 Mil
Second Round
$3,000,000
$35.0 Mil
$38.0 Mil

First Round
$6,000,000
$12.1 Mil
$18.1 Mil

1c. If Wolf had used the same assumption in the valuation as the founders, he must’ve used a IPO value of $50.6 Mil.
1d. If Wolf used the $1/Share, and $80 Mil valuation, he must’ve used an implicit discount rate of 63.32%.
1e. If we follow the $80 Mil valuation, and 63.32% assumption, but double the amount shares for owners, the investors then should not be paying at $1 per share, but rather $0.50 per share. Wuz should not be an MBA Student.
1f. No, what vulture ventures hope to buy is the Participating Preferred Shares, which act as a loan to the company, at a rate of 8% for interest, which would be paid back in the form of dividends. The remainder amount that was not paid back as dividend, will act as equity and will receive the shares’ equity.
Question 2
2a. See the founder’s NPV value according to each founder

Expected NPV
Annabella
$6,366,453
Krishunuvara
$8,001,877
Bob
$6,453,123

2b. See the different valuation based on different expectations below

Round 1
Round 2

Pre Money
Post Money
Pre Money
Post Money
Annabella
$9,955,565
$13,955,565
$40,611,177
$42,611,177
Krishunuvara
$13,633,806
$17,633,806
$45,771,700
$47,771,700
Bob
$10,071,680
$14,071,680
$36,525,565
$38,525,565

2c. According to Gary, founders’ NPV would be $2,361,524.

Round 1
Round 2

Pre Money
Post Money
Pre Money
Post Money
Gary Gloom
$965,393
$4,965,393
$21,305,589
$23,305,589

Question 3
3a.

Krish Model
New CEO Model
Preference

Worth