CA Final · Advanced Financial Management · Startup Finance
Nirmaan Tech, a startup, raises Rs 6 crore from an angel investor by issuing shares at a pre-money valuation of Rs 18 crore. Immediately after the round, what percentage of the company does the angel investor hold, and what is the post-money valuation?
The investor holds 25% and the post-money valuation is Rs 24 crore. Post-money is pre-money of Rs 18 crore plus the Rs 6 crore invested, and the stake is the investment divided by post-money value, 6/24. Dividing by pre-money would wrongly give 33.33%.
- A25% stake; post-money Rs 24 croreCorrect
- B33.33% stake; post-money Rs 18 crore
- C25% stake; post-money Rs 18 crore
- D33.33% stake; post-money Rs 24 crore
Explanation
Post-money valuation = pre-money Rs 18 crore + new money Rs 6 crore = Rs 24 crore. Investor stake = 6/24 = 25%. The 33.33% figure comes from the mistake of dividing the investment by the pre-money valuation (6/18).
Did you get it right without looking?
One question tells you little. A timed set on Startup Finance shows your real accuracy, how long you take and where you lose marks.
More Startup Finance questions
- A founder pitches Zest Foods with expected year-5 revenue of Rs 50 crore and a sector exit multiple of 4x revenue. The venture investor requ…
- A startup with recurring revenue has already raised equity and wants to extend its runway without significant further dilution. It borrows f…
- 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, an…
- A Bengaluru-based agritech venture, KrishiLink, has built a working prototype and has 200 farmers testing it free of charge. It has no reven…
- A venture fund offers Rs 6 crore to Kavya Tech for a pre-money valuation of Rs 18 crore. After the investment, the fund's percentage holding…
- Aarav Foods, a startup, receives a term sheet from a venture fund. Which statement best describes the legal status of a standard term sheet …