A startup's pre-money valuation is the single number that decides how much of your company you trade for outside capital. It is the price the market agrees your business is worth before the new wire hits the bank. This calculator takes two inputs — the amount you are raising and the equity stake the investor wants — and works backward to reveal the pre-money valuation, the post-money valuation, the price per share, and exactly how many new shares get issued.
If you have ever sat across the table from an investor who said "we are in for $2M at a $10M post," this is the tool that turns that sentence into a term sheet you can read in seconds.
How to Use
- Enter the Investment Amount (The Raise) — the total new dollars the investor(s) are putting into this round. A typical seed round in the United States ranges from $500,000 to $3,000,000; a Series A often runs $3,000,000 to $10,000,000.
- Set the Investor Ownership After Round — the percentage of the company the investor will own once the wire clears. This is the dilution you and your co-founders absorb. Early-stage investors usually ask for 15%–25% of the company per round.
- Optionally enter Current Shares Outstanding — the fully diluted share count before this round (founder shares, employee option pool, early angels). The calculator uses it to derive the price per share and the number of new shares issued to the incoming investor.
- Read the result card: Post-Money Valuation first, then Pre-Money Valuation, then the per-share price and new share issuance.
The math is intentionally one line: post-money = investment ÷ ownership %, and pre-money = post-money − investment. Slide the ownership slider up and watch your pre-money valuation collapse — that is the negotiation in a single number.
The Pre-Money Formula
Venture capital math rests on one identity:
Post-Money Valuation = Investment ÷ Investor Ownership % Pre-Money Valuation = Post-Money Valuation − Investment
Worked example: a startup raises $2,000,000 for 20% of the company. Post-money = $2,000,000 ÷ 0.20 = $10,000,000. Pre-money = $10,000,000 − $2,000,000 = $8,000,000. The investor's stake is exactly $2,000,000 ÷ $10,000,000 = 20% — which is how you know the round prices cleanly.
If the company has 4,000,000 fully diluted shares outstanding before the round, the price per share is the pre-money valuation divided by the old share count: $8,000,000 ÷ 4,000,000 = $2.00 per share. The investor then receives $2,000,000 ÷ $2.00 = 1,000,000 new shares, bringing the post-round total to 5,000,000 shares, and 1,000,000 ÷ 5,000,000 = 20% ownership. Every number ties out.
Why Pre-Money vs Post-Money Matters
Founders and investors fight over pre-money for a simple reason: at a fixed raise, a higher pre-money means less founder dilution. If the same $2M comes in at a $10M pre instead of an $8M pre, the post-money is $12M and the investor gets only 16.7% instead of 20% — a difference of 3.3 percentage points of equity, often worth tens of millions of dollars at exit.
The cap table also re-prices itself. Every existing share — founder common, angel convertible notes, employee options — is suddenly worth the new price per share. A higher pre-money is therefore a direct wealth transfer from the new investor to every early holder. That is why VCs anchor low and founders anchor high, and why a competitive round (two term sheets) usually lifts the pre-money by 20%–40% without changing the business at all.
Examples
Example 1 — The canonical seed round. A SaaS startup raising $2,000,000 gives up 20% to its lead seed fund. Post-money is $10,000,000, pre-money is $8,000,000, and the price per share on 4,000,000 existing shares is $2.00. Founders who held 100% before the round now hold 80%; the option pool (if it is part of the pre-money) is drawn from that 80%, not from the new investor.
Example 2 — A larger Series A. A growth-stage company raises $5,000,000 for 25% of the business. Post-money = $5,000,000 ÷ 0.25 = $20,000,000, pre-money = $15,000,000. With 10,000,000 shares already outstanding, the new price per share is $1.50 and the lead fund receives 3,333,333 new shares. Existing holders are diluted by exactly 25% in aggregate.
Example 3 — A small angel check. A pre-seed founder takes $500,000 from an angel for 15% of the company. Post-money is $3,333,333 and pre-money is $2,833,333 — a typical early pre-money that reflects a team, a deck, and little or no revenue. On 2,000,000 founder shares, the price per share is about $1.42 and the angel gets roughly 352,941 new shares.
FAQ
What is the difference between pre-money and post-money valuation?
Pre-money valuation is the agreed value of the company before the new investment arrives. Post-money valuation is the company's value after the cash hits the bank. The relationship is simply: post-money = pre-money + investment, and investor ownership = investment ÷ post-money.
How do I calculate pre-money valuation from a raise and a target ownership?
Divide the investment by the investor's target ownership percentage to get the post-money valuation, then subtract the investment. For example, raising $2,000,000 for 20% gives a post-money of $10,000,000 and a pre-money of $8,000,000.
What is a typical investor ownership percentage for a seed or Series A?
Seed investors usually ask for 15%–25% of the company per round. Series A leads often take 20%–30%, and larger growth rounds can dilute founders by 25%–40% in a single deal. Over three or four institutional rounds, founders commonly go from 100% down to 10%–20% of the fully diluted company.
How does the option pool affect pre-money valuation?
Most investors insist that the employee option pool be sized before the round, which means the dilution from the pool comes out of the founders' pocket, not the new investor's. A $10M pre-money with a 10% pool carved out actually prices the founders' shares lower than the headline number suggests. Ask whether the pool is pre-money or post-money before signing.
What price per share should my round have?
Price per share = pre-money valuation ÷ fully diluted shares outstanding before the round. It is not a negotiated number on its own — it is the mechanical result of the valuation and your existing share count. If your lawyer or accountant reports a different price, either the share count or the pre-money is wrong.
Can pre-money valuation be negative or zero?
No. A negative raise or a negative ownership percentage has no real-world meaning and the calculator rejects it. A company can trade at a low valuation (even a "down round" below the previous round), but the pre-money number itself must always be a positive dollar figure.
Does a higher pre-money valuation always mean a better deal for founders?
Usually yes, but not always. An aggressive pre-money with a large liquidation preference, a ratchet, or a punitive anti-dilution clause can leave founders with less in an exit than a lower headline valuation on clean terms. Valuation is one variable; the whole term sheet is the deal.
Disclaimer
This pre-money valuation calculator is provided for informational purposes only and does not constitute legal, tax, investment, or fundraising advice. Valuations in real venture rounds are negotiated between sophisticated parties and depend on traction, comparables, the option pool, convertibles, warrants, and the full term sheet — none of which this tool substitutes for. Always confirm your cap table, price per share, and ownership split with a qualified startup attorney and your lead investor before closing a round.