Term Sheets and Investment Deal Structuring Assessment
Module 4 • 10 Questions
Question 1 of 10
0 of 10 answered
A Series A VC invested $2,000,000.00 at an original conversion price of $10.00 per share (receiving 200,000 convertible preference shares). Total outstanding pre-round shares were 1,000,000 (the founders' 800,000 plus the VC's 200,000). Due to severe headwinds, the company completes a Series B down round, issuing 200,000 new shares at $5.00 per share. The Series A VC holds Full Ratchet anti-dilution protection. What is the VC's reset conversion price, how many common shares do they claim on conversion, and what is their resulting ownership percentage immediately after the down round?
A
Reset Price: $5.00; Converted Shares: 400,000; Ownership: 28.57%
B
Reset Price: $5.00; Converted Shares: 200,000; Ownership: 16.67%
C
Reset Price: $10.00; Converted Shares: 200,000; Ownership: 14.29%
D
Reset Price: $7.50; Converted Shares: 266,667; Ownership: 21.05%