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Neverfail Computing Essay

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Below is an essay on "Neverfail Computing" from Anti Essays, your source for research papers, essays, and term paper examples.

Considering the future of the Computer industry, current profile of Neverfail Computing has a reasonably predictable potential for growth, within a given time to attract Venture Capitalists. Neverfail Partners posses excellent negotiating skills, and always maintain their casual attitude while negotiating. Ted, CFO worked as a VP of Citibank, his financial skills helped him to evaluate the value of the firm and convince Pacific ridge investor’s that Neverfail Computing is worth $9 million and total investment should be at least $1 million.

Initial valuation:
The company was initially valued at $47,960 (March-April 1993) according to exhibit 2 on the case study. This was the initial amount invested by two of Neverfail founding employees. 4,796,000 shares of common stock were issued at $0.01 par value.
After Angel Investment:
According to the case, George Lawrence and another Seattle Angel acquired 800,000 shares of convertible preferred stock at $1 per share. This gives a total of $800,000. With this new development, if we assume that the previous 4,796,000 shares of common stock that were originally issued in March of 1993 are now also worth $1 per share, this gives a total of $4,796,000. The total valuation of the company will then be $800,000 + $4,796,000 = $5,596,000. This is the value that we believe to represent the valuation of Neverfail as of November 1994.
After round 1 of VC investment:
Due to the deal with the Pacific Ridge, Neverfail share prices were going for $1.50 per share The Company was valued at $9 million as of December 1994 according to the case study.
Initial value of Pacific ridge investment (December 1995) is:
666,667 * $1.50 + 133,333 * $0.3 = $1,040,000.4 (initial investment, exhibit 7).
If we now value the rest of the company’s stock before venture capitalist investment at $1.50, we have: $1.50 * (800,000 + 4,796,000) = $8,394,000.
Adding this to the Pacific Ridge investment” $1,040,000 + $8,394,000 = $9,434,000.
This value...

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