Pre and Post Money Valuation Calculator
Enter the investment and the equity the investor receives to find the pre-money and post-money valuation.
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Pre and Post Money Valuation Calculator
Our Pre and Post Money Valuation Calculator shows what a company is worth before and after an investment. Enter the amount the investor is putting in and the percentage of the company they will own after the deal. It helps founders see how much of the business they are giving away, and helps investors see what valuation an offer implies.
Quick answer
Post-money valuation is investment ÷ investor equity, and pre-money is post-money − investment: 300,000 ÷ 25% = 1,200,000 post-money and 900,000 pre-money.
- Pre-money: what the company is worth before the new money arrives.
- Post-money: pre-money valuation + investment.
- Investor equity: investment ÷ post-money valuation.
- Dilution: existing owners keep 100% minus the investor equity.
What Are Pre-Money and Post-Money Valuation?
- Pre-money valuation is the agreed value of a company before it receives a new investment. It reflects the business as it stands: assets, revenue, intellectual property, market potential and growth prospects.
- Post-money valuation is the value of the company right after the investment. It includes the new capital the investors have added.
= Pre-money valuation
+ Investment
The investor's ownership is always measured against the post-money valuation: an investor who puts in 300,000 at a post-money valuation of 1,200,000 owns 300,000 ÷ 1,200,000 = 25%.
Pre and Post Money Valuation Formula
When you know the investment and the equity it buys, work backwards to the two valuations:
= Investment ÷ Investor equity
= Post-money − Investment
Use the equity as a decimal in the division (25% is 0.25). The calculator accepts it as a percentage.
How to Calculate Pre and Post Money Valuation
A startup called GreenTech Innovations is looking for funding. An investor offers 300,000 for 25% of the company.
= 300,000 ÷ 0.25
= 1,200,000
Pre-money valuation
= 1,200,000 − 300,000
= 900,000
- Take the investment. The cash the investor puts in: 300,000.
- Take the investor equity. The share they own after the deal: 25%, or 0.25.
- Divide for post-money. 300,000 ÷ 0.25 = 1,200,000.
- Subtract for pre-money. 1,200,000 − 300,000 = 900,000.
Pre and Post Money Valuation Examples
| Deal | Valuation |
|---|---|
| 300,000 for 25% | Pre-money 900,000 Post-money 1,200,000 |
| 50,000 for 10% | Pre-money 450,000 Post-money 500,000 |
| 2,000,000 for 20% | Pre-money 8,000,000 Post-money 10,000,000 |
The second deal is a small software company raising 50,000 for a 10% stake. The third is a fast-growing online shop raising 2,000,000 for 20%: it was worth 8 million before the round and is worth 10 million after it.
Why These Valuations Matter
- For founders: they show how much equity you give away for a given investment, so you can negotiate knowing what the offer values your company at.
- For investors: they show how much ownership the money buys, and whether the price fits the risk and the possible return.
Together the two numbers set the ownership structure, the dilution of existing shareholders and the starting point for the next funding round.
Pre-Money vs Post-Money: Why the Label Matters
The same headline number means very different things depending on whether it is a pre-money or a post-money figure. Take an investment of 2,000,000 "at an 8,000,000 valuation":
| If 8,000,000 is | Then |
|---|---|
| Pre-money | Post-money is 10,000,000 and the investor owns 20%. |
| Post-money | Pre-money is 6,000,000 and the investor owns 25%. |
That is a difference of five percentage points of the company for the same money. Always confirm which valuation is being quoted before agreeing terms.
Dilution and Share Price
New money is paid for with newly issued shares, so everyone who already owns shares ends up with a smaller percentage. After an investor takes 25%, the existing owners keep 75% between them. A founder who held 60% before the round holds 60% × 75% = 45% after it.
The pre-money valuation also sets the share price. If GreenTech has 1,000,000 shares before the deal:
= 900,000 ÷ 1,000,000
= 0.90
New shares
= 300,000 ÷ 0.90
≈ 333,333
The investor then holds 333,333 of 1,333,333 shares, which is 25%.
When to Use This Calculator
- Startup fundraising rounds
- Angel or venture capital negotiations
- Private equity deals
- Strategic partnerships or buy-ins
- Planning an employee share option pool
Limits and Common Mistakes
- Valuation is negotiated. The formula is exact, but the numbers going in depend on market conditions, growth forecasts and investor confidence.
- Dividing by the wrong base. Investor equity is investment ÷ post-money, not investment ÷ pre-money.
- Mixing up the labels. Check whether a quoted valuation is pre-money or post-money.
- Ignoring other dilution. Option pools, convertible notes and SAFEs that convert in the round reduce existing owners further.
- Skipping advice. Use the result as a guide and take professional advice on high-value deals.
Key Terms
- Pre-money
- Company value before the new investment.
- Post-money
- Company value after it: pre-money plus the investment.
- Equity
- Ownership in the company, as a percentage or a number of shares.
- Dilution
- The fall in existing owners' percentage when new shares are issued.
- Funding round
- One event in which a company raises money from investors.
How to Use the Pre and Post Money Valuation Calculator
- Enter the investment. Type the amount the investor is putting into the business, such as 300,000. Commas and a currency sign are fine.
- Enter the investor equity. Type the percentage of the company the investor will own after the investment, such as 25.
- Read and copy the result. The pre-money valuation appears as you type, with the working, the post-money valuation, the share existing owners keep and a bar showing the split. Press Copy to copy it, or Clear or Esc to start again.
Example: 2,000,000 for 20% equity. The pre-money valuation is 8,000,000 and the post-money valuation is 10,000,000, from 2,000,000 ÷ 20%. Existing owners keep 80%.
Who Can Use This Calculator?
Frequently Asked Questions (FAQs)
How do you calculate pre-money and post-money valuation?
Divide the investment by the investor equity (as a decimal) to get the post-money valuation, then subtract the investment to get the pre-money valuation. Post-money = investment ÷ equity, and pre-money = post-money − investment.
What is the valuation if an investor offers 300,000 for 25%?
The post-money valuation is 300,000 ÷ 0.25 = 1,200,000 and the pre-money valuation is 1,200,000 − 300,000 = 900,000.
What is the difference between pre-money and post-money valuation?
Pre-money valuation is what the company is worth before new investment comes in. Post-money valuation adds the new capital, so post-money = pre-money + investment. The investor ownership is measured against the post-money figure.
Why are pre and post money valuations important during fundraising?
They decide how ownership is split. Founders use them to see how much of the company they are giving away, and investors use them to see how much they gain in return. Agreeing both numbers avoids misunderstandings.
How much equity does an investor get?
Investor equity = investment ÷ post-money valuation. An investment of 2,000,000 at a post-money valuation of 10,000,000 buys 20%.
How much are founders diluted in a funding round?
Existing owners keep 100% minus the investor equity, shared in proportion to what they held. If an investor takes 25%, a founder who held 60% holds 60% × 75% = 45% afterwards.
How accurate is the calculator for real deals?
The maths is exact for the numbers you enter. Real valuations also depend on market conditions, investor confidence, intellectual property and growth forecasts, and on terms such as option pools and convertible notes. Use it as a guide and take professional advice on large deals.
Is the Pre and Post Money Valuation Calculator free?
Yes. It is completely free, needs no sign-up, and can be used as many times as you like.
Sources
- Wikipedia. Pre-money valuation.
- Wikipedia. Post-money valuation.
- Corporate Finance Institute. Pre-money valuation.
- Y Combinator. Understanding SAFEs and priced equity rounds.
Try our Pre and Post Money Valuation Calculator to see what an offer values your company at.