Financial problems 1&2 – In July 2017, the startup company
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Problem 1
In July 2017, the startup company ABC raised $1 million ($1,000,000) angel funding from investor Brad. Company ABC’s sole founder and CEO, Greg, offered Brad the “same kind of stock that I own – common stock.” Brad was happy to receive common stock and a $9 million ($9,000,000) pre-money valuation for his investment. What percentage of the company ABC did Brad own in July 2017 immediately after his angel investment?
Problem 2
The Snap Inc., went public (IPO) on March 2rd, 2017. The chart below was based on its SEC Form 424B4 filing. Read the chart and answer questions:
IPO Status
Priced
Symbol
SNAP
Exchange
NYSE
Price to Public
$17.00
Underwriting Discounts and Commission
$0.425
Proceeds to Snap Inc.
$16.575
Proceeds to Selling Stockholders
$16.575
Class A common stock offered by Snap Inc.
145,000,000 shares
Class A common stock offered by the selling stockholders
55,000,000 shares
1. What’s the total number of shares offered to public in the initial public offering?
2. What’s the total dollar amount that Snap has raised in the initial public offering?
3. What’s the total costs of underwriting discounts and commission?
4. In the initial public offering, how much was proceeds to Snap Inc. after considering all underwriting discounts and commission?
5. In the initial public offering, how much was proceeds to the selling stockholders after considering all underwriting discounts and commission?
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