The following describes a series of investments in a company called “CollegeFinancing. com.” The company has devised a unique online marketplace that allows students taking entrepreneurial finance to crowdsource their registration fees and course material costs from private equity groups and corporate consulting companies in exchange for those companies being able to get real time data on student performance in the class. The companies essentially front the cost for student education to get a first look at potential hires. CollegeFinancing. com was founded by Kathleen Ramsay, a senior at Cal Poly San Luis Obispo, who is its sole owner now. 1st Investment Round (Series A)

Kathleen has just been contacted by PolyCanyon Ventures (PCV), a Cal Poly-focused investment fund, which is interested in making an investment in her company. PCV plans to buy an equity stake in the company. The startup expects to use the funds received from the financing to improve their product, hire additional developers, and for expenses associated with outreach and onboarding of the private equity and corporate consulting groups.

PCV offers Kathleen $2.5 million for 20% of the company (Teacher’s note: In real life PCV makes much smaller investments). PCV is nervous that Kathleen hasn't established an option pool and therefore requires a 10% option pool be created before they will invest a single dollar. The parties agree that the share price will be $1 per share. Build the cap table before and after this Series A funding round and use it to answer the following questions.

What percent of the company does Kathleen own after the Series A investment round is completed?