CA Final · Advanced Financial Management · Startup Finance
Ananya Labs has a pre-money valuation of ₹40 crore. Before the round, founders hold 100% of 10,00,000 shares. An angel invests ₹10 crore, and in addition the company creates an ESOP pool equal to 10% of the post-round fully diluted capital, included in the pre-money valuation (angel's percentage is based on post-money of ₹50 crore). How many shares will the founders hold as a percentage of the post-round fully diluted capital?
Founders hold 70% of the post-round fully diluted capital. The angel's ₹10 crore against a ₹50 crore post-money valuation gives 20%, the ESOP pool takes 10%, and founders keep the remaining 70%. Ignoring the ESOP pool would wrongly give 80%.
- A70%Correct
- B72%
- C80%
- D90%
Explanation
Post-money is ₹50 crore, so the angel holds 10/50 = 20%. The ESOP pool is 10% of post-round capital. Founders hold 100 − 20 − 10 = 70%. Ignoring the pool would give 80%, which treats founders as the only other holder.
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