Company: SusEn Innovation (Sustainable Packaging Platform)
Challenge: You are one of 3 co-founders of SusEn Innovation, a revolutionary sustainable packaging platform poised to revolutionize the e-commerce industry. All co-founders are equal partners in the venture. Thanks to three distinct funding rounds, you’ve secured the capital to fuel your company’s growth. Details of each round are described below:
Pre-Seed Round: $500,000 Convertible Notes (5 Investors)
Greenwood Ventures: $150,000 (Led by Sarah Green, a seasoned sustainability investor)
EarthSpark Angels: $100,000 (Group of prominent environmental entrepreneurs)
Ecopact Solutions: $80,000 (Leading biomaterials research company)
ZeroWaste Fund: $70,000 (Non-profit focused on plastic reduction)
TerraNova Capital: $100,000 (Early-stage impact investment firm)
Key Terms:
Discount rate: 18%
Cap: $3 million
Conversion clause: Automatic conversion at next financing round with minimum investment of $1m
Seed Round: $2 million Common Stock (5 Investors)
Forest Growth Partners: $400,000 (VC firm specializing in green tech)
EcoTech Collective: $300,000 (Angel investor group of tech executives)
Renewables Inc.: $250,000 (Major e-commerce company)
Greenify Ventures: $200,000 (Seed-stage impact investor)
TerraCycle Industries: $350,000 (Recycling leader looking to diversify)
Key Terms:
Valuation: $5 million pre-money
Pro-rata rights for existing investors
Series A Round: $8 million Preferred Stock (1.2x liquidation preference, 1.5x voting multiplier) (5 Investors)
EverGreen Capital: $2.5 million (Leading private equity firm focused on sustainability)
Sprout Ventures: $1.5 million (VC firm with expertise in e-commerce)
Green Angels Network: $1 million (Angel investor group of industry veterans)
PackSmart Inc.: $1 million (Packaging technology company seeking partnership)
Forest Growth Partners (Follow-on investment): $1 million (Maintaining their existing stake in the company)
TerraCycle Industries (Follow-on investment): $1 million (Deepening their commitment to sustainable packaging)
Key Terms:
Valuation: $30 million pre-money
Anti-dilution protection for preferred investors
Additional Information:
During the Seed round, the company issued 15 million stock options to its employees and key personnel, representing 10% of the fully diluted capitalization.
No stock has been repurchased or canceled.
Instructions:
Design a comprehensive cap table for SusEn Innovation as of the Series A closing date, reflecting the instrument used in each round and incorporating the follow-on investments by Forest Growth Partners and TerraCycle Industries.
Calculate the fully diluted capitalization, considering all outstanding convertible notes and stock options.
Discuss the possible strategic rationale behind choosing the types of investors and instruments for each round.
Simulate an exit scenario: Assume the company is acquired by a large corporation for $120 million. Calculate the exit value for each shareholder, considering their ownership percentages, liquidation preferences (if applicable), and any other relevant terms.
Please follow the example provided. It should be an excel document in the same format as provided. There should be more calculations made.
