Suppose your company has 8 million shares outstanding and you’re fortunate enough to be able to raise $4 million at an $8 million pre-money valuation in your Series A. That’s a $12 million post-money valuation and each share is valued at $1.00. You continue to own 8 million shares after the financing, but you issue 4 million new shares to the investors, thus you now own 8M/12M or 67 percent of your company and you have $4 million in the bank.
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To read the original article: How You Get Slaughtered in a Down Round: When Taking Venture Capital Doesn't Go as Planned
