OptiGuard, Inc.: Series A-Round Term Sheet Case Solution & Answer

OptiGuard, Inc.: Series A-Round Term Sheet Case Study Solution


Richard Mannix, a software engineer was interested in starting his own business. He was working in Cisco Inc, which is a large technological firm. Mannix found his interest in working on network security. He met Carl Bolencamp, who was an expert in security product. Later on, Bolencamp and Mannix decided to start their own company. In 2013, Mannix with growing interest in cyber security decided to resign from his job to start his own business, named OptiGuard

It was expected that the global market of workforce security will reach to 1.3 billion by 2015. OptiGuard believes that there is a great market opportunity for data security and compliance software product. The company launched its first product, which was designed to protect the mobile devices that use android operating system.(OptiGuard, Inc.: Series A-Round Term Sheet, 2017)

Problem Statement

Richard Mannix, the CEO of OptiGuard was seeking for additional funding for its newly born cyber security company. In the beginning, he wasn’t successful in attracting investors to get his company invested in. Later on, Woodland Venture Partner (WVP) made an offer of 5million in against of 40% convertible preferred stock. Richard Mannix needed to make a decision whether or not the offer of WVP is enough in against of 40% of the firm’s equity?

Question 1: If the term sheet is closed and there is an exit after the Series A round, how much do different investors get paid?

If the term sheet closed and the series Around is an exit, the company will pay off its debt first then it willprefer shareholders and at the end the real owners of the company will get their shares.

The ending amount will be distributed among them, according to the percentage they invested in the company. The following chart will show the shares of each shareholder in the company, at end. Name of Common Stock holder’s Common shares % of Holding Share of investment at end
1 Richard Mannix 1,000 61%                     10,931,018,178.77
2 Carl Bolencamp 400 24%                        4,372,407,271.51
3 Seed Investors 140 9%                        1,530,342,545.03
4 Other Investors 100 6%                        1,093,101,817.88
  Total No. of share 1,640 100%                     17,926,869,813.19

Note: It is being assumed that the company series Around and the term sheet end at the year 2019.

Richard Mannix will have more share as compared to other shareholders, because of his heavy investment in the company.  Richard Mannix will get more than 10 million from the profit of the company, after deducting the share of the preferred stockholder…………………………


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