CA Final · Advanced Financial Management · Startup Finance
A term sheet for Nimbus Pay Pvt Ltd provides that the investor invests Rs 10 crore at a pre-money valuation of Rs 40 crore. Existing shares are 20 lakh. The term sheet also requires an employee option pool equal to 10% of the post-money fully diluted capital, created before the investment and included in the pre-money valuation. Ignoring existing options, what is the price per share for the investor?
The price is Rs 175 per share by computation, which is not among the options.
- ARs 200.00
- BRs 250.00
- CRs 160.00Correct
- DRs 180.00
Explanation
Post-money = 50 crore; investor holds 20%, pool 10%, so existing holders have 70% = 20 lakh shares. Total fully diluted shares = 20/0.7 = 28.571 lakh. Price = 50 crore / 28.571 lakh = Rs 175. Check: investor shares = 5.714 lakh × 175 = Rs 10 crore. So the option giving 175 is needed, but none matches; recompute with pricing: pre-money 40 crore / (20 + pool 2.857 lakh) = 40 crore/22.857 lakh = Rs 175.
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