1. What is Pre and Post Valuation?

Pre-money valuation refers to a company's value before it receives external funding or investments. Post-money valuation includes the investment amount and represents the company's value after the funding round.

2. How Does the Calculator Work?

The calculator uses the simple valuation formula:

Where:

• \( Post \) — Post-money valuation ($)
• \( Pre \) — Pre-money valuation ($)
• \( I \) — Investment amount ($)

Explanation: The formula calculates the total company valuation after an investment by adding the investment amount to the pre-money valuation.

3. Importance of Valuation Calculation

Details: Accurate valuation calculations are crucial for determining ownership percentages, equity dilution, and negotiating investment terms between founders and investors.

4. Using the Calculator

Tips: Enter pre-money valuation and investment amount in dollars. Both values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between pre-money and post-money valuation?
A: Pre-money is the company's value before investment, while post-money includes the investment amount and represents the total value after funding.

Q2: How does valuation affect ownership percentage?
A: Investment amount divided by post-money valuation determines the investor's ownership percentage in the company.

Q3: What factors influence pre-money valuation?
A: Market size, traction, team experience, revenue, growth potential, and comparable company valuations all influence pre-money valuation.

Q4: Can post-money valuation be lower than pre-money?
A: No, post-money valuation is always equal to or greater than pre-money valuation since it includes the investment amount.

Q5: How often should valuations be updated?
A: Valuations are typically updated during funding rounds, but companies may also conduct interim valuations for employee stock options or other purposes.