4 ms·
The new investor is willing to pay $100M for 25% of the company. That means they think the company will be worth $400M after they invest $100M. That means the c
by scatters 9y ago
The new investor is willing to pay $100M for 25% of the company. That means they think the company will be worth $400M after they invest $100M. That means the current value of the company is ~$300M, not ~$400M.
- adamlett 9y agoNo. What someone is willing to pay and what something intrinsically is worth is not the same thing. If the stated presumption is that the company was worth $400M before the $100M cash infusion, then it follows that it must be worth $500M after that.
- sokoloff 9y agoYes, but the original problem statement was flawed (over constrained and confictingly constrained). It was "pre-money $400M", "new investment $100M", "new investment gets 25%". Those can't all be held true. You can change exactly one of them to remove the conflict, so it's either "pre money $300M", "new investment $133.33M", or "new investment gets 20%"