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You founded your own firm two years ago. You initially contributed $250 000 of your own money and in return you received 2.5 million shares of stock. Since then, you have sold an additional 1.25 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.
-Suppose you sold the 1.25 million shares to the angel investor for $500 000. What was the post-money valuation of your shares immediately following the angel investor's investment?

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The angel investor purchased 1.25 million shares for $500,000, which means that each share was priced at $0.40 ($500,000 ÷ 1.25 million shares). 
Immediately following the angel investor's investment, there were a total of 3.75 million shares outstanding (2.5 million originally issued to you + 1.25 million sold to angel investors). 
Therefore, the post-money valuation of the company was $1.5 million (3.75 million shares outstanding x $0.40 per share). Since you already invested $250,000, the post-money valuation of your shares was $1 million (2.5 million shares originally issued to you x $0.40 per share).

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