Pre-Money and Post-Money Valuation Calculator
Post and pre-money valuation calculator does simple math to free your mind up to do more important things when you are negotiating your startup's valuation. It does not answer the question "how much is my startup worth" in the general sense (based on how much revenue, traction, margins or whether it breaks even). Instead, it does multi-directional math, and, if you provide any two values from investment amount, investor's equity, pre-money or post money valuation, you will receive the remaining two values. Let's take a typical scenario: a startup accelerator invests $25,000 for a 5% stake in the company. The calculator will tell you that this startup's valuation was $475k pre-money and is $500k post-money.
Interested in various methods of company valuation? Check out the discounted cash flow calculator!
Pre-money and post-money valuation
The difference is rather simple - pre-money valuation is how much the company is worth, or the value of a company's equity before the investment flows into the startup. Post-money valuation is how much a startup is worth after the money enters the company. For example, a startup that lets you store goat pictures in the cloud is valued at $10 million (pre-money). The ACME Venture Capital invests $2.5 million in a series A round. Now the company has whatever it had that was worth $10M, plus the $2.5M in cash, so it's worth $12.5 million. 20% of $12.5 million is $2.5 million, so ACME now has 20% of the company. Note that both pre-and post-money valuations are equity valuations.
On a separate note, here are some of our other tools that you may be interested in:
FAQ
What is pre-money valuation?
Pre money valuation is defined as the value of the company before considering the investment it is going to get. It is smaller than the post-money valuation.
What is post-money valuation?
The post-money valuation is the value of the company after it gets the investment from the investors. It is usually higher than the pre-money valuation.
How do I calculate post-money valuation from pre-money valuation?
You can calculate the post-money valuation in steps:
- Determine the pre-money valuation
- Determine the investment that the company is going to get
- Apply the post money valuation formula:
post-money valuation = pre-money valuation + investment
Can pre-money and post-money valuation be negative?
No, as both valuations represent the value of a company, it is impossible for a company to be worth less than zero.