OptiGuard, Inc.: Series A-Round Term Sheet Harvard Case Solution & Analysis

OptiGuard, Inc.: Series A-Round Term Sheet Case Study Analysis

S.no Name of Common Stock holder's Common shares % of Holding Share of investment at end
1 Richard Mannix 1,000 61%                           11,696,250,496
2 Carl Bolencamp 400 24%                              4,678,500,198
3 Seed Investors 140 9%                              1,637,475,069
4 Other Investors 100 6%                              1,169,625,050
  Total No. of share 1,640 100%                           19,181,850,813

Note: It is being assumed that the company series Around and the term sheet end at the year 2019.

It is assumed that the investors and their shares in common stock remain same in series round B. Richard Mannix will still get more than the other shareholders. In the series A round Richard Mannix got more than 10 million, but in Series B round it his profit has increased by more than 1 million. Carl Bolencamp, in the series A round; got more than 4.3 million and in the series B round he received more than 4.6 million.

In short, all the shareholders will receive more in Series B round, in comparison to series A round.

Question 4: Suppose you were Mannix. Prepare a document to argue for a higher valuation.

Currently, the company’s stock is valued at the low rate in comparison to its market value. The market value of company’s stock is 8 million, and only 5 million is funded in against of it. It is possible for OptiGuard to value its stock at high rate, if they operate in series B round. In series B round, the company hasmany investors who are willing to invest in the company, and when the number of investors is high; the company’s stock value increases automatically. The company can finance its operation by issuing shares or borrowing at a minimal cost,regardless of the fact that whether the cost is in dividend form or in interest form. The company would not incur severe losses in Series B round,but it is difficult in series A round when the company is at its initial stage. The company wouldn’t be able to attract the investors efficiently and would end up paying the investors or lenders’ desired cost................................


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