Post-money Valuation Calculator
Calculate post-money valuation of a company and the investor share (%) with the investment amount and pre-money valuation.
If a company raises $10m at a pre-money valuation of $40m, the post money valuation would be $50m and the investor will get a 20% share.
Post-money valuation is a simple yet important way to determine the total value of your company after an investment round.
Pre-money valuation is the value of a company before new funding. Post-money valuation is the value after receiving the new funding.
How to use the Post-money Valuation Calculator
To calculate the post-money valuation of your round, input the following data points:
- Investment amount, that is the amount of money raised in the round
- Pre-money valuation, the assessment made by the investor on the company worth before receiving the new money
The output includes:
- Post-money valuation = Pre-money valuation + Investment amount
- Investor share (%) = Investment amount / Post-money valuation
An Example of Post-Money Valuation
A startup raises $5m investment round at a $20m pre-money valuation. This leads to:
- Post-money valuation = $5m + $20m = $25m
- Investor share (%) = $5m / $25m = 20%
Practical Examples of Post-Money Valuation
| Company | Round | Pre-money Valuation | Investment Amount | Post-money Valuation | Investor Share (%) |
|---|---|---|---|---|---|
| Stripe | Series G | $34 billion | $600 million | $34.6 billion | 1.73% |
| SpaceX | 2020 Funding | $36 billion | $1.9 billion | $37.9 billion | 5% |
| Robinhood | Series F | $7.6 billion | $280 million | $7.88 billion | 3.55% |
| Instacart | 2020 Funding | $13.7 billion | $200 million | $13.9 billion | 1.44% |
| Airbnb | Series E | $20 billion | $850 million | $20.85 billion | 4.08% |
Insights on Post-Money Valuation
Here are some additional insights related to post-money valuation that might be helpful:
1. Pre-Money vs. Post-Money Valuation Impact
- Dilution impact: The post-money valuation directly impacts founder ownership. With each round, founder shares can get diluted as more equity is issued to new investors.
- Investor leverage: High pre-money valuations give founders more leverage, while lower valuations often favor investors who receive a larger share for their investment.
2. Key Terms and Provisions to Consider
- Liquidation preferences: Investors often negotiate liquidation preferences, which ensure they’re first in line to be paid if the company exits, protecting their investment even if the exit valuation is low.
- Anti-dilution clauses: Some investors add provisions to protect against dilution if future rounds are raised at a lower valuation (down rounds). This can mean adjusting their equity stake to prevent dilution.
- Participating preferred shares: Investors with these shares can receive both their investment back and a portion of remaining proceeds, which can impact founder earnings in a sale.
3. Stages of Investment and Valuation Trends
- Early-stage vs. late-stage valuations: In early rounds (seed, Series A), valuations are often lower as the company is more speculative. By Series C or D, companies with traction can negotiate higher pre-money valuations.
- Market trends influence: Economic conditions and industry trends can impact valuation levels. For instance, valuations in tech boomed from 2020–2021 due to high demand, but fluctuated post-2022 with market corrections.
4. Common Mistakes When Considering Valuation
- Ignoring future dilution: Founders often overlook how future funding rounds will further dilute their ownership.
- Overvaluing early: High initial valuations may seem positive, but can backfire if the company struggles to meet expectations, making it harder to raise future funds at favorable terms.
- Not accounting for option pools: Many companies create stock option pools to attract talent, which can increase dilution but isn’t always factored into initial valuation discussions.
5. Interesting Facts about Valuations
- "Unicorn" companies: A "unicorn" is a privately held startup valued at over $1 billion. These valuations attract top investors and media attention but come with high expectations for growth and profitability.
- "Down rounds" and "Up rounds": When a company raises funds at a lower valuation than previous rounds, it’s called a down round. This can decrease founder equity and morale. An up round, conversely, raises the valuation and reflects company progress.
- The largest post-money valuations: Companies like Stripe, ByteDance, and SpaceX have set records with post-money valuations in the hundreds of billions, capturing investor interest and positioning them as market leaders.
