What is Pre-Money & Post-Money Valuation?
Pre-money valuation is the equity value of a company immediately before new capital is added in a financing.
Post-money valuation is the equity value immediately after the financing, equal to pre-money plus the new investment.
These definitions matter because ownership percentage, voting control, and equity dilution are all negotiated off a “pre” vs “post” framing—often on a fully diluted cap table that includes option pools and other potential shares.
Formula
Example
New investment amount: $5,000,000
Investor ownership after the round: 20%
Result: Pre-money valuation = $20,000,000; Post-money valuation = $25,000,000.
Frequently Asked Questions
I know the investment amount and the % the investor will own after the round—how do I back into the pre-money valuation?
Use post-money = investment ÷ (ownership% / 100), then pre-money = post-money − investment.
What “ownership after the round” % should I enter—before or after the option pool?
Enter the investor’s post-round, fully diluted ownership. If the option pool is being increased “pre-money,” your effective founder pre-money is lower than the headline number—model the option pool separately.
Why does my pre-money look “too high” compared to what we discussed on the term sheet?
You’re likely mixing definitions (headline vs effective pre-money) or ignoring dilution items (option pool top-up, SAFEs/convertibles). This calculator assumes a simple priced equity round with a single post-money ownership %.
How do I calculate the post-money valuation from a target ownership percentage?
Post-money valuation = investment amount ÷ (ownership% / 100). The investor’s % is implied by how much of the post-money they’re buying.
Sources & Methodology