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You founded your own firm three years ago.You initially contributed $200,000 of your own money and in return you received 2 million shares of stock.Since then,you have sold an additional 1 million shares of stock to angel investors.You are now considering raising capital from a venture capital firm.This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return.
-After the venture capitalist's investment,the post-money valuation of your shares is closest to:

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Quizplus · Accepted Answer

The post-money valuation is the value of the company after the venture capital firm's investment. The venture capital firm is investing $5 million for 2 million shares, which means the post-money valuation is $5 million / 2 million shares = $2.50 per share. The founder owns 2 million shares, so the post-money valuation of the founder's shares is 2 million shares * $2.50 per share = $5 million.

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