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Post Money = Pre Money + Investment
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Pre-money valuation refers to the value of a company before it receives new investment, while post-money valuation is the value after the investment has been added. Understanding these concepts is crucial for founders and investors in funding rounds.
The calculator uses the simple formula:
Where:
Explanation: The post-money valuation is simply the sum of the pre-money valuation and the investment amount.
Details: These valuations determine the ownership percentage that investors receive and the dilution of existing shareholders. Accurate calculation is essential for fair equity distribution.
Tips: Enter pre-money valuation and investment amount in USD. Both values must be positive numbers. The calculator will show the resulting post-money valuation.
Q1: How does this affect founder ownership?
A: The investment amount divided by post-money valuation equals the investor's percentage ownership, diluting existing shareholders proportionally.
Q2: What's the difference between pre-money and post-money options pools?
A: Pre-money option pools are created before investment and dilute both founders and investors, while post-money pools only dilute founders.
Q3: How do convertible notes affect these calculations?
A: Convertible notes typically convert at a discount to the next round's pre-money valuation, affecting the final ownership percentages.
Q4: What are typical pre-money valuations for startups?
A: Valuations vary widely by stage and industry, from $1-3M for seed rounds to hundreds of millions for late-stage companies.
Q5: How often should valuations be reassessed?
A: Valuations are typically reassessed during each funding round, though internal valuations may be done more frequently for reporting purposes.