An entrepreneur founded his company using $200,000 of his own money,issuing himself 200,000 shares of stock.An angel investor bought an additional 100,000 shares for $200,000.The entrepreneur now sells another 400,000 shares of stock to a venture capitalist for $1 million.What is the post-money valuation of the company?

Question

Quizplus · Accepted Answer

The post-money valuation is the total value of the company after the latest round of funding. In this case, the entrepreneur initially invested $200,000 for 200,000 shares, giving the company a pre-money valuation of $200,000. The angel investor then invested $200,000 for 100,000 shares, giving the company a post-money valuation of $400,000. The entrepreneur then sold 400,000 shares to the venture capitalist for $1 million, giving the company a post-money valuation of $1,750,000.

An Entrepreneur Founded His Company Using $200,000 of His Own