Venture Capital Valuation

How do I know the discount rate to use for the post value since it gives two?

The founders think that the company can be sold in INR 180 million after five years. Paul has discussed with them the terms and conditions of the venture capital investment. Currently, the founders have 200,000 shares with them. They want the venture capital investment in two stages. In the first stage, they will need INR 10 million, and in the second stage, they will require additional INR 20 million. The money for the first stage will be given right now and the second stage money will be provided at the beginning of the third year.

Paul thinks that the investment has a high amount of risk due to changing government regulations in the education sector and lack of entrepreneurial experience for Indian companies. He thinks that a discount rate

You use the 2nd stage, you discount from the terminal to the start of the 2nd stage using the 2nd stage discount. Then from the beginning of the 2nd stage to the beginning of the first stage, you discount using the 1st stage discount.

Ok that makes sense. Are you able to help explain the last stage of a problem like this? Where it comes time to figure out the number of shares needed to be issued. I am having trouble conceptualizing the formula and why it is this way. (Shares held by founder*VC%)/(1-%VC)