Emailing the Other Team

[Ash, Hilary]

Hey Guys, 

Mike and I computed the shares and share prices. Now we just need to decide which to present to the founder team. We included 'safe-bet' calculations for a pre-money of 20M and 15M in addition to the best outcome calculations we performed for the various liquidation preferences. Please take a look at the calculations and give input on which you feel we should propose. Mike and I were thinking of going with one of the safe bet calculations at first, citing risk and inexperience. We could always pump up the valuation as we negotiate to get better terms (thus using one of the liquidation calculations we did previously). 

Check out the excel doc on the google drive and email the group by tonight. I will email the other group in the morning with our valuation. 

Best, 

Hilary 

[Justin Meltzer]

Looks good. I think we should probably go with the 20M only because we're competing with another group and so picking something that is not outrageously low from the onset might make them more likely to choose us. Also we haven't factored in dividends. Now I'm thinking that we probably should factor them in because they could make a huge difference in what pre-money val. we're willing to accept.

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Signature by Airtime for Email

[Ash, Hilary]

But technically were paying cash dividends and that calculation we discussed in class was stock dividends, right? If not, could someone add it into the doc so we can email them tomorrow? What do people think?

Hil

Sent from my iPhone

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[Justin Meltzer]

The terms are that we receive 10% cumulative cash dividends with the option of being paid in stock at the original purchase price of the Series A round.

I would but I'm completely booked tonight.

[Shreeya Goel]

I agree that in our initial terms, we should go with a safe bet calculation - maybe not as low as that calculated for the 15M valuation, but somewhere between 900,000 and 1,150,000 shares should be a good starting point (we're hard-asses right?)

On Mon, Nov 12, 2012 at 6:09 PM, Ash, Hilary <ha...@wharton.upenn.edu> wrote:

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Shreeya Goel

Jerome Fisher Program for Management and Technology

The Wharton School 2014 | University of Pennsylvania

Candidate for Bachelor of Science in Economics

School of Engineering and Applied Sciences 2014 | University of Pennsylvania

Candidate for Bachelor of Science in Engineering - Computer Science

215 251 1245

shreey...@gmail.com

[Ash, Hilary]

Yeah I agree. Mike and I computed the share prices and numbers for all the options considered based on the risk assessment and write up he and i did after the meeting yesterday. Can anyone add in the dividend info sometime tomorrow? I won't be home tonight to add it in. If not, I can try to do it tomorrow but I'm not 100% confident with my understanding of it.

Hil 

Sent from my iPhone

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[Shreeya Goel]

I can do it. I'm just not sure what the calculation should be - as I understand it, since the dividend is 10% per share, the formula should be 0.1*earnings*%share ownership right? I'm using after-dilution share ownership,... which can only be calculated knowing money after dividends, so factoring the results of that row into money needed from share conversions results in a circular dependency. Basically, there's one more row in the spreadsheet right now calculating money from dividends based on the formula I mentioned earlier, but the numbers from it aren't being used anywhere. They're really small, so they might not actually make that much of a difference, but I'm not sure how to resolve the circular dependency issue right now haha - maybe someone else could take a look at it?

[Ash, Hilary]

That makes sense to me. Ill take a look at it tomorrow. If we think it doesn't actually make a big difference, then we can not worry about it too. Especially in the event that the dividend term changes. If people have a strong preference for inclusion v exclusion in the final valuation, email the group tomorrow. Otherwise, I can send over the final numbers to the other group tomorrow! 

Thanks everyone,

Hil 

Sent from my iPhone

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[Ash, Hilary]

Hey guys,

I want to get back to the other group today. Can we take a poll as to which share number/price we'd like to offer the founder team. If we want to go with the 20M valuation one and then adjust based on however the dividend term (among others) changes, we could. Just let me know! 

Thanks, 

Hil

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[Michael Bear]

20 works for me. i'd also be happy with 15 just so it gives us room to concede up and get other terms

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[Shreeya Goel]

Yeah, I'd go with 20