An investor has offered $150,000 for 20% of the company.The company has a pre-money valuation of $350,000.Should the entrepreneur consider the offer?

Question

Quizplus · Accepted Answer

The investor is offering $150,000 for 20% of the company, which implies a post-money valuation of $750,000 ($150,000 / 20%). Since the company has a pre-money valuation of $350,000, the total valuation after the investment would be $500,000 ($350,000 + $150,000).

This offer is beneficial for the entrepreneur because the investor is valuing the company at a higher price than the current pre-money valuation of $350,000. Therefore, the entrepreneur should consider the offer.

An Investor Has Offered $150,000 for 20% of the Company