Pre-Money and Post-Money Valuation Calculator

Pre-Money and Post-Money Valuation

When a startup raises a funding round, two valuations matter: the pre-money valuation (what the company is worth before the investment) and the post-money valuation (what it’s worth after the investment is added).

Formulas:

Post-Money Valuation = Pre-Money Valuation + Investment Amount

Investor Equity % = Investment / Post-Money Valuation

Founder Equity % = Pre-Money Valuation / Post-Money Valuation

Example:

• Pre-money valuation: $8,000,000
• Investment: $2,000,000
• Post-money valuation: $10,000,000
• Investor owns: $2M / $10M = 20%
• Founders retain: $8M / $10M = 80%

Price per share:

If you know the number of shares outstanding before the round:

Price per Share = Pre-Money Valuation / Shares Outstanding (pre-round)

New Shares Issued = Investment / Price per Share

Common term sheet negotiation points:

• Option pool shuffle: investors often require adding a new option pool to the pre-money valuation, which dilutes founders before the round closes
• Liquidation preference: investors may receive 1x or 2x their investment before founders receive anything in an exit
• Anti-dilution provisions: protect investors if a future round is at a lower valuation (down round)

Typical valuation benchmarks:

Valuations vary enormously by sector, traction, team, and market conditions.

Key insight: The pre-money vs post-money distinction matters most when discussing ownership percentages — always confirm which valuation is being used when negotiating a term sheet.