CA Final · Advanced Financial Management · Startup Finance
Zenith Health raises Rs 10 crore from an investor on a post-money valuation of Rs 40 crore. The term sheet requires a 10% post-money employee option pool to be created before closing, with the pool counted in the pre-money valuation. Founders hold 100% before the deal. What percentage of the post-money company do founders hold after the investment and pool creation?
Founders hold 65%. The investor takes Rs 10 crore of Rs 40 crore post-money, which is 25 percent, and the option pool is 10 percent of post-money, both coming out of the pre-money. That leaves 100 minus 25 minus 10, or 65 percent, for founders.
- A65%Correct
- B75%
- C90%
- D60%
Explanation
Investor holds 10/40 = 25%. Pool is 10% of post-money. Founders hold 100 - 25 - 10 = 65%. The 75% option ignores the pool; 60% wrongly adds extra dilution.
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