Entrepreneurial Finance — DU Bachelor of Business Administration (Financial Investment Analysis) Previous Year Question Papers

Semester vI/VIll Q1. A health-tech startup, HealthAl, based in Bengaluru, is raising multiple rounds of funding. It's Initial Situation (Year O) is that Founders own 100% (10 lakh shares) and no revenue yet. It goes for ROUND 1: SEED (Year 1) for the Investment of 72 crore at the pre-money valuation: 48 crore and 1x Participating Liquidation Preference (no cap). In ROUND 2: SERIES A (Year 2) - Investment: 78 crore at pre-money valuation: 732 crore. An ESOP pool is created = 10% (pre-money basis) with Same liquidation preference. ROUND 3: SERIES B (Year 3 - DOWN ROUND) - Investment: 710 crore; Pre-money valuation: 720 crore; Full ratchet anti-dilution for Series A EXIT (Year 5) - Startup is acquired for 7100 crore You are required to 5x6 = 30 marks a. Calculate Post-money valuation & ownership at the end of Round 1. b. Adjust valuation for ESOP and Calculate new ownership (Founders, Seed, Series A, ESOP) after Round 2. c. After Round 3 adjust Series A ownership using full ratchet and Compute revised cap table d. If All investors have: 1x Participating preference (no cap) then Calculate payout to: Series B; Series A; Seed; and Founders e. If Exit happens at 425 crore, how much founder will get? Q2. Critically evaluate the statement: "Incubators create entrepreneurs, accelerators create scalable businesses." 15 marks Q3a. Explain key stages of startup financing (seed, early-stage, growth, late-stage) in details. Q3b. Highlight challenges faced by startups in raising funds. 10+5 = 15 marks " Q4. "Equity financing is expensive but flexible, while debt financing is cheaper but risky." Discuss this statement in the context of startups and evaluate the two alternatives. 15 marks Q5. Discuss the role of government initiatives in startup financing in India. Evaluate their effectiveness in promoting innovation and entrepreneurship. 15 marks Q6. Write short notes on the followings: 5x3 = 15 marks a. Angel Fund b. Private Equity