The Pre-Money and Post-Money Valuation Calculator quantifies a company’s value before and after an investment. Input the investment amount and investor’s ownership percentage to evaluate how funding affects valuation.

Pre and Post Money Valuation Calculator

Pre and Post Money Valuation Calculator

Calculate your company’s pre-money and post-money valuation based on investor inputs.

? The amount invested by the investor in dollars.
? The ownership percentage the investor receives.

Calculation of Pre-Money and Post-Money Valuations

Pre-money and post-money valuations are key metrics for determining a company’s worth pre- and post-investment.
The pre-money valuation represents the company’s value prior to new capital, calculated by deducting the investment amount from the post-money valuation. It reflects the business’s baseline worth.

The post-money valuation is derived by adding the investment amount to the pre-money valuation, establishing the company’s total value inclusive of new funds and serving as the basis for equity allocation.

Post-Money Valuation Formula:

\(\text{Pre-Money Valuation} = \text{Post-Money Valuation} – \text{Investment Amount}\)

Pre-Money Valuation Formula:

\(\text{Post-Money Valuation} = \text{Pre-Money Valuation} + \text{Investment Amount}\)

Example: A pre-money valuation of $4 million with a $1 million investment yields:

\(\text{Post-Money Valuation} = 4,000,000 + 1,000,000 = 5,000,000\)

Equity and Ownership Post-Investment

Investor equity is determined by the investment amount relative to the pre-money and post-money valuations.
For instance, a $1 million investment with a $4 million pre-money valuation results in a 20% ownership stake.

Equity Calculation:

\(\text{Investor’s Equity (%)} = \frac{\text{Investment Amount}}{\text{Post-Money Valuation}} \times 100\)

Example: With a $1 million investment and $5 million post-money valuation:

\(\text{Investor’s Equity (%)} = \frac{1,000,000}{5,000,000} \times 100 = 20%\)

This percentage defines the investor’s stake, influencing control and profit distribution.

Importance of Valuation in Business Strategy

Pre- and post-money valuations are critical for assessing growth potential, setting funding benchmarks, and informing strategic decisions.

Accurate valuations enhance investor appeal by reflecting market value, clarify ownership structure, support financial forecasting, and align operational objectives.

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