1. What is Pre Money Valuation?

Pre Money Valuation refers to the valuation of a company before it receives outside investment or financing. It's a key metric used by investors and founders during funding rounds.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Pre Money — Company valuation before investment
• Post Money — Company valuation after investment
• Investment Amount — The amount being invested

Explanation: The pre-money valuation plus the investment amount equals the post-money valuation.

3. Importance of Pre Money Valuation

Details: Pre-money valuation determines the ownership percentage investors receive for their investment and affects dilution of existing shareholders.

4. Using the Calculator

Tips: Enter post-money valuation and investment amount in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between pre-money and post-money?
A: Pre-money is before investment, post-money is after. Post-money = pre-money + investment.

Q2: How is pre-money valuation determined?
A: Through negotiation between founders and investors, considering factors like traction, market size, and team.

Q3: What's a typical pre-money valuation for startups?
A: Varies widely by stage and industry, from $1-5M for seed rounds to hundreds of millions for late-stage.

Q4: How does pre-money affect equity distribution?
A: Investor's equity % = (Investment Amount / Post-money Valuation) × 100.

Q5: Can pre-money be higher than post-money?
A: No, pre-money is always less than post-money by exactly the investment amount.