Pre Post Money Calculator

What is Pre Post Money?

Pre-money valuation refers to the value of a company before a funding round, while post-money valuation is the company's value after the investment has been received. These terms are commonly used in startup financing to determine the equity dilution and the effective price per share of the new investment.

The difference between pre-money and post-money valuation is the amount of capital raised. This difference is often referred to as the "valuation cap" or "valuation multiple."

How to Use This Calculator

To use this calculator, you need to know the following information:

• The pre-money valuation of the company
• The amount of capital to be raised
• The valuation cap (optional)

Enter these values into the calculator, and it will compute the post-money valuation and the valuation multiple. The calculator also provides a visual representation of the valuation change.

Formula Explained

The formulas used in this calculator are as follows:

These formulas are based on the assumption that the company's valuation is proportional to the amount of capital raised. However, in reality, the valuation may be influenced by other factors such as market conditions, industry trends, and the company's growth prospects.

Worked Examples

Let's look at a couple of examples to illustrate how the pre post money calculator works.

Example 1

A startup has a pre-money valuation of $10 million and raises $2 million in a funding round. What is the post-money valuation and the valuation multiple?

Using the formulas:

• Post-Money Valuation = $10,000,000 + $2,000,000 = $12,000,000
• Valuation Multiple = $12,000,000 / $10,000,000 = 1.2x

Example 2

A startup has a pre-money valuation of $5 million and raises $1 million in a funding round. What is the post-money valuation and the valuation multiple?

Using the formulas:

• Post-Money Valuation = $5,000,000 + $1,000,000 = $6,000,000
• Valuation Multiple = $6,000,000 / $5,000,000 = 1.2x