Entrepreneurial Finance In-Class Exercise 2 Outreach Networks: First Venture Round Solution Steps 1 Select the appropriate comparable companies and explain your choice: 2 Calculate Valuation metric from the Comps that you selected: EV/EBITDA (EBITDA ratio) = 3 Calculate ORN’s value at exit. Apply comp EBITDA ratio to ORN’s projected year 6 EBITDA: 4 Calculate the PV of ORN by discounting the year 6 value at the VC’s required rate of return: 5 Calculate Series A VC’s required ownership percentage by dividing today’s cash investment by the present value: 6 Calculate required shares to be issued (n): n = (Existing shares x Acquired %) / (1 – Acquired %) 7 Calculate total shares outstanding: Existing Shares + New Shares = 8 Price per share (Investment / Shares Received) = Capitalization Table Shares % Founder/Management Team Everest Partners Total