CMA Final · Entrepreneurship and Startup · The Entrepreneurial Ecosystem
A startup's founders sell 20% equity to an investor for ₹3 crore. Later, they realise that the investor's contribution is treated as the price for the stake. What post-money valuation is implied by this deal?
The implied post-money valuation is ₹15 crore, because ₹3 crore buying 20% means the whole company is worth 3 divided by 0.20. The pre-money value is ₹12 crore, so choosing that confuses pre-money with post-money valuation.
- A₹15 croreCorrect
- B₹12 crore
- C₹3.6 crore
- D₹60 crore
Explanation
Post-money valuation equals investment divided by the percentage acquired: 3 crore / 0.20 = ₹15 crore. Pre-money is therefore ₹12 crore, which is the common error of subtracting the investment. ₹3.6 crore arises from multiplying by 1.2, and ₹60 crore from multiplying by 20.
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