WHY SFM
We believe entrepreneurs should have the best possible resources to help plan and launch their businesses. And we believe those resources should be easy to understand and easy to use. And because entrepreneurs usually have limited resources, we believe those resources should be very affordable for you.

YOUR SUCCESS IS OUR MISSION.

HOW
We help you achieve your goals to clarify and communicate your plan, raise the capital you need, launch your business, and experience success as an entrepreneur.

WHAT
We’ve built what we believe is the finest business planning tool available (and our customers agree) and we want to put it in your hands at a price you can afford. What more could an entrepreneur want?

© 2020 Boldmore Growth Partners, LLC.  All Rights Reserved

  • Wade Myers

How to Calculate Pre-Money and Post-Money Valuations


Q: I keep hearing about "pre-money" and "post-money" valuation, but frankly, I'm a bit confused about what it means and how to calculate it. Can you please provide some guidance?

A: The “Pre-Money” value is the valuation of your company prior to an investment.


Formula: The Pre-Money value = the number of shares outstanding on a fully-diluted basis (include all issued, but unvested options and warrants as if they will be fully issued, vested, and exercised) x $ price/share


The “Investment” is the amount of money the investor(s) invest(s).


The “Post-Money” value is the sum of the Pre-Money value and the Investment.


Formula: Post-Money value = Pre-Money Value + Investment Amount


The percent of the Investor's ownership is expressed as follows:


Formula: Investor’s ownership = Investment / Post-Money value


Example: If your seed capital investor and you agreed through negotiation that your startup was worth $1 million at the time of the angel investment, then the Pre-Money value is the $1 million. If your investor then invested $0.5 million in the startup, then the Post-Money valuation of your startup is $1.5m (the Pre-Money + the Investment) and your investor would end up with an ownership of one-third of the company calculated as follows: $500,000/$1,500,000 = 33.33%.


Click here to download our handy Pre-Money Post-Money Valuation Calculator Excel tool.


The good news is that our Startup Financial Model app automatically calculates your Share Price, Pre-Money and Post-Money valuations, as well as the ownership for each ownership class for each round based on your inputs of the amount invested and the number of shares sold. Our app also produces an Ownership and Capitalization table for you, automatically inserts the cash impact on your financial statements, updates your overall startup budget, and produces a detailed investor return summary for you.


Please see this blog post on entering equity assumptions for additional guidance.

Can't find an answer? Contact us and we'll get back to you!