Question

You founded your own firm three years ago. You initially contributed $200,000 of your own money and in return you received 2 million shares of stock. Since then, you have sold an additional 1 million shares of stock to angel investors. You are now considering raising capital from a venture capital firm. This venture capital firm would invest $5 million and would receive 2 million newly issued shares in return.
Assuming that this is the venture capitalist's first investment in your firm, what percentage of the firm will you own?

A) 50%
B) 40%
C) 33%
D) 25%

Answer 1

Answer:

B: 40%

Explanation:

Total shares = 2 + 1 + 2 = 5 million

percentage owned by me = 2/5 *100 = 40%