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 $150,000. The entrepreneur now sells another 400,000 shares of stock to a venture capitalist for$2 million. What is the post-money valuation of the company?

Question

Quizplus · Accepted Answer

C) Total shares = 200,000 + 100,000 + 400,000 = 700,000;
400,000 shares for $2 million leads to a share price of $5.00 per share;
Company valuation = 5.00 × 700,000 = $3,500,000

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