1. What Are Pre and Post Money Valuations?

Pre-money valuation refers to a company's value before it receives new investment, while post-money valuation is the value after the investment has been added. These concepts are fundamental in startup funding rounds in Australia and worldwide.

2. How the Calculator Works

The calculator uses these formulas:

Where:

• \( Investment \) — The amount being invested in AUD
• \( Post\ Ownership\ \% \) — The percentage of the company the investor will own after the investment
• \( Pre \) — The pre-money valuation in AUD
• \( Post \) — The post-money valuation in AUD

Explanation: The formulas show the relationship between investment amount, ownership percentage, and company valuation.

3. Importance in Startup Funding

Details: Understanding pre and post-money valuations is crucial for both founders and investors in Australia to negotiate fair terms and understand dilution effects.

4. Using the Calculator

Tips: Enter the investment amount in AUD and the desired post-investment ownership percentage (as a percentage, not decimal). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why are these valuations important in Australia?
A: They determine how much equity investors receive for their capital and affect future funding rounds under Australian investment laws.

Q2: How does this differ from share price calculation?
A: Valuations determine total company worth, while share price would divide this by the number of shares outstanding.

Q3: What's typical for early-stage Australian startups?
A: Pre-money valuations vary widely but often range from AUD 500,000 to AUD 5 million for seed rounds in Australia.

Q4: How does SAFE or convertible note affect this?
A: These instruments convert to equity in future rounds, typically at a discount, affecting final ownership percentages.

Q5: Are there Australian tax implications?
A: Yes, valuations can affect capital gains tax and other tax considerations under Australian law - consult a tax professional.