What is Post-Money Valuation?
Post-money valuation is a financial metric that represents the total value of a company after receiving an external investment. This valuation includes the new capital injected by investors and is a critical figure for both investors and founders to understand the equity distribution following an investment round.
When to Use a Post-Money Valuation Calculator
A post-money valuation calculator is useful in several scenarios:
- When raising investment capital and negotiating terms with potential investors
- When determining equity dilution for existing shareholders after a new funding round
- When planning future funding rounds and understanding how valuation changes affect ownership percentages
How to Calculate Post-Money Valuation
The formula for calculating post-money valuation is:
Post-Money Valuation = Investment Amount / (Investor Equity Percentage / 100)
From this, you can derive:
Pre-Money Valuation = Post-Money Valuation - Investment Amount
Founder Equity Percentage = 100 - Investor Equity Percentage
Examples
Example 1: Seed Funding Round
A startup receives $500,000 in seed funding in exchange for 20% equity. What is the post-money valuation?
| Input | Value |
|---|---|
| Investment Amount | $500,000 |
| Investor Equity Percentage | 20% |
| Results | Value |
| Post-Money Valuation | $2,500,000 |
| Pre-Money Valuation | $2,000,000 |
| Founder Equity Percentage | 80% |
Example 2: Series A Funding
A growing company secures $2 million in Series A funding for 15% equity. Calculate the post-money valuation.
| Input | Value |
|---|---|
| Investment Amount | $2,000,000 |
| Investor Equity Percentage | 15% |
| Results | Value |
| Post-Money Valuation | $13,333,333 |
| Pre-Money Valuation | $11,333,333 |
| Founder Equity Percentage | 85% |
Example 3: Late-Stage Investment
An established company receives $10 million for 8% equity. What is the resulting valuation?
| Input | Value |
|---|---|
| Investment Amount | $10,000,000 |
| Investor Equity Percentage | 8% |
| Results | Value |
| Post-Money Valuation | $125,000,000 |
| Pre-Money Valuation | $115,000,000 |
| Founder Equity Percentage | 92% |
Important Considerations
- Post-money valuation is always higher than pre-money valuation by exactly the amount invested
- The equity percentage given to investors directly impacts the implied valuation of your company
- Higher post-money valuations mean less dilution for existing shareholders when raising a fixed amount
- Investors often negotiate in terms of pre-money valuation, but post-money is the resulting company value