CS Professional · Strategic Management and Corporate Finance · Sources of Corporate Funding
A start-up, Nimbus Foods Pvt Ltd, has a pre-money valuation of ₹40 crore. A venture fund invests ₹10 crore for new equity shares. What percentage of the post-money company will the fund hold?
The fund will hold 20%. Post-money valuation equals pre-money ₹40 crore plus new investment ₹10 crore, giving ₹50 crore. The investor's share is ₹10 crore divided by ₹50 crore, which is 20 percent. Using the pre-money value as the base gives an incorrect 25 percent.
- A25%
- B20%Correct
- C10%
- D33.33%
Explanation
Post-money valuation = 40 + 10 = ₹50 crore. Fund's stake = 10/50 = 20%. Choosing 25% wrongly divides the investment by the pre-money value (10/40).
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