Adelaide appears on Dragons' Den and asks the investors for $120,000 in return for a 15% stake in her company. Jim Treliving really likes her product but offers her $120,000 in return for a 25% stake in her company. What is Jim's probable reasoning for this offer?
A) Adelaide has underestimated the amount of sales and revenue she will generate with her product.
B) Adelaide's company is worth much more than she is valuing it at.
C) Adelaide is valuing her company too high.
D) In order to invest in Adelaide's company, he would require a bigger share.

Question

Quizplus · Accepted Answer

Jim's offer implies he believes Adelaide's valuation of her company is too high, so by asking for a larger stake for the same amount of money, he is effectively valuing the company at a lower total worth than Adelaide did.

Adelaide Appears on Dragons' Den and Asks the Investors for $120,000