But sometimes a startup is not given the post-money valuation figure from an investor and therefore can’t make the easy pre-money valuation determination via Equation (1) below. Rather, the investor will tell the startup (a) how much they are investing and (b) what percentage they want — this is where Equation (2) below comes into play.
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Value the company at what you think it's worth, just remember that doesn't mean the investors will agree. Simple example, if you need $300k and your willing to give say 30% equity for that investment your companies post-money valuation would be $1MM. Pre-money $700k. If you want to give 40% use $300k/.4 which equals $750k post-money valuation.
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When a startup raises capital, valuation is main economic term that must be tackled. The two main ways valuation is expressed in venture capital financings are what’s known as the “pre-money valuation” and the “post-money valuation”.
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The startup’s valuation immediately before the venture capital investment is called “pre-money valuation” while the startup’s valuation immediately after the venture capital financing is closed is called the “post-money valuation.”. Equation (1) below explains how to calculate the pre-money valuation.
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POST-MONEY VALUATION definition - When a firm is valued after a sale and when new shares are issued, it is called post money valuation. Generally taken by multiplying the total amount of ou POST-MONEY VALUATION definition - When a firm is valued after a sale and when new shares are issued, it is called post money valuation. Generally taken by multiplying the total amount of ou Skip to primary navigation
https://thelegaldictionary.org/dictionary/post-money-valuation/
(1) Pre-money Valuation = Post-money valuation – Venture Capital Investment. (2) Post-money Valuation = Venture Capital Investment/Venture Capital Fund Ownership Percentage. Note that to you can determine share price by the following equation: (3) Share Price = Pre-money Valuation/Number of Pre-money shares.
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If you bookmark this page, you can be sure to know what your pre-money and post-money valuation is when a prospective investor gives you the variables for the above equations. Venture Capital valuation
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Post-money valuation = $3MM/.30 = $10MM. Thus, to calculate pre-money valuation, we use equation (1) as we now know the post-money valuation and the investment amount: Pre-money valuation = $10MM – $3MM = $7MM. Example 2. Now let’s say a venture capital firm offers your startup company a $4MM investment at a $6MM pre-money.
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34 thoughts on “What is a Pre-money and Post-money Valuation?”. 1  So, if an angel wants 5% of my company, assuming I had one. 2  So, if an angel wants 5% of my company, assuming I had one. 3  Jim, I re-wrote the post to (hopefully) make it more clear. 4  Jim, I re-wrote the post to (hopefully) make it more clear. 5  Thanks. 6  Thanks.
http://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation
post-money valuation October 17, 2015 by Black's Law Dictionary When a firm is valued after a sale and when new shares are issued, it is called post money valuation. Generally taken by multiplying the total amount of outstanding shares with the individual price of a newly issued share.
https://thelegaldictionary.org/dictionary/post-money-valuation/
what does post money valuation mean
When a firm is valued after a sale and when new shares are issued, it is called post money valuation.