+1-817-968-5551
+61-488-839-671
+44-7480-542904About Expert
Key Topics
Requirement
Case Study Questions
1.Why did the VC ?rms like the fact that the company had received signi?cant government grants? Assume that this had not happened and that all the funding for the company had come from VCs. Add an earlier seed round to replace the government funds, and make an estimate of the dilution that Parviz and the founders would have had to take in this case if the VCs were to retain their IRR. Approximately how much less would the founders have in their pockets when the company was sold?
2.Draft a short term sheet (no more than two pages) for each investment round under the new circumstances of question 1.
3.Give three reasons Adams Capital Management, the lead VC ? rm, was good ?t for this opportunity
Solution
Answer 1:-
A VC is typically a group of managers who come together with an intention to generate money. This is their main intention. They manage high-risk investments so as to maximize the returns. Further, A VC is set for a limited time period ranging at about 10 years. Thus at the end the investments are to be liquidated under any circumstances. The proceeds from such liquidation are distributed amongst the members of the VC as per the pre-determined arrangement. Thus VC’s look for small businesses with great recognition and engaged in a field with great potential. Hence, a business receiving government funding is recognized and a safer bet as a lot of diligence is already done by the government before the funding. Further, the funding is for a greater commercial cause and hence there is an expectation of huge potential in the future. Hence the VC’s appreciated government funding of the company in the given case. In the case of the government funding is replaced by the Seed funding. It is very likely that the founder would have to part away with 50% of their ownership in the initial stage itself. Thus a dilution of 50%. Thus eventually when the company would is sold they might be left with 50% less than the current proceeds received by them.
Are you searching for financial management assignment help from professional writers? Then you are at the perfect place. Allassignmenthelp.com is a one-stop solution for all types of assignment writings. We have expert writers who are degree holders from renowned universities. Whether you need behavioral finance assignment help or corporate finance assignment help, we are always ready to help you.
TERM SHEET
CoreTek Inc. (1998)
This term sheet is a mere representation of the understanding of the parties in relation to proposed investment in the company. This is not a legally binding agreement and hence will not constitute a legally bound obligation. Any further legally binding agreement shall be made only after objective and definitive negotiations and discussions duly executed by the parties involved.
ROUND -1
-
Issuer - CoreTek Inc
-
Securities – Class A Preferred Shares
-
Amount of offer: $ 5.5 million based on a pre-money valuation
-
Investors- Adams Capital Management
-
Terms of the Preferred: Preference in payments in case of liquidation of the Company. The holder retains the option for conversion into “Common Shares”.
-
Co-sale: In case of sale of shares to a third party, the same shall be at the terms agreed herewith.
-
Fees: The Company will pay a fee of 2.5 % per annum to the VC
-
Founder matter: Each founder shall bring all the intellectual property into the company and shall be on employment with the company for a period of 8 years.
ROUND 2
-
Issuer - CoreTek Inc
-
Securities – Class A Preferred Shares
-
Amount of offering: $ 6 million based on pre-money valuation of $11.5 million
-
Investors- Adams Capital Management
-
Terms of the Preferred: Preference in payments in case of liquidation of the Company. The holder retains the option for conversion into “Common Shares”.
-
Co-sale: In case of sale of shares to a third party, the same shall be at the terms agreed herewith.
-
Fees: The Company will pay a fee of 2.8 % per annum to the VC
Place Order For A Top Grade Assignment Now
We have some amazing discount offers running for the students
Place Your OrderROUND 3
-
Issuer - CoreTek Inc
-
Securities – Class A Preferred Shares
-
Amount of offer: $ 20.5 million based on pre-money valuation of $ 52.5 million.
-
Investors- Adams Capital Management
-
Terms of the Preferred: Preference in payments in case of liquidation of the Company. The holder retains the option for conversion into “Common Shares”.
-
Co-sale: In case of sale of shares to a third party, the same shall be at the terms agreed herewith.
-
Fees: The Company will pay a fees of 3 % per annum to the VC
CorTek Inc Adams Capital Management
Signed by: __________ Signed by: __________
Name: ___________ Name: ___________
Date: ___________ Date: ___________
Adams Capital Management was a good fit for this opportunity because:
They understood the small business
They were quick decision makers
Their intention was to grow the overall business and profitability and not dilute the interest of the entrepreneur.
Give your grades a boost
Just share your requirements and get customized solutions on time.
-
1,168,768 Orders
-
4.9/5 Overall Rating
-
5,052 Experts
