He decides to take the company public through an IPO, issuing 2 million new shares. Assuming that he successfully completes the IPO, the net income for the next year is estimated to be $8 million
David found a company and goes through the investment rounds shown below:
Round Source Price Number of Shares
Series A Self $0.50 325,000
Series B Angel $1.00 475,000
Series C Venture Capital $1.50 200,000
Series D Venture Capital $2.25 350,000
His banker informs him that the price of shares should be set using average price-earnings ratios for similar businesses, which is 14. What share of the company will David own after the IPO?
A) 10%
B) 13%
C) 15%
D) 19%
Answer: A
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