Pre and Post Money Valuation Calculator

The pre and post money valuation calculator converts the core arithmetic in a startup term sheet into plain numbers. Enter the new investment amount, the investor’s post-round equity percentage, and the founder or existing-holder ownership before the round. The form returns post-money valuation, pre-money valuation, investment amount, investor equity, founder ownership after the round, and dilution of pre-round holders. The calculator’s logic is exact: post-money valuation equals investment divided by investor equity as a decimal; pre-money valuation equals post-money valuation minus investment; founder ownership after the round equals founder ownership before the round multiplied by one minus investor equity.

This page is for priced-round math. It does not decide whether a valuation is fair, whether a company should raise now, or how legal documents allocate control. It is still a useful check because many financing conversations mix up pre-money and post-money language. A founder hearing “20% for $500,000” needs to know that the investment buys 20% of the post-money company, not 20% of the pre-money company. For related planning, connect this result with the burn rate calculator, business budget calculator, and carried interest calculator.

What the inputs mean

Investment is the new money entering the company. It should not include existing cash already on the balance sheet unless the term sheet explicitly treats that cash as part of a special structure. Investor’s equity is the percentage of the company the new investor owns after the round closes. The form requires this value to be above zero and no more than 100. Founder ownership before round is optional context for dilution. It can represent founders alone or all pre-round holders, depending on how you want to study the cap table.

If the pre-round holders owned 100%, the after-round ownership number shows their collective remaining share after the new investor is issued shares. If the founders already owned 70% before the round because employees, angels, or an option pool held the rest, entering 70% shows the founders’ specific post-round percentage after investor dilution.

Formula used by the calculator

The investor equity input is converted from a percent to a decimal:

$\text{equity decimal} = \frac{\text{investor equity}}{100}$

Post-money valuation is:

$\text{post-money valuation} = \frac{\text{investment}}{\text{equity decimal}}$

Pre-money valuation is:

$\text{pre-money valuation} = \text{post-money valuation} - \text{investment}$

Founder or existing-holder ownership after the round is:

$\text{founder ownership after} = \text{founder ownership before} \times (1 - \text{equity decimal})$

Dilution is:

$\text{dilution} = \text{founder ownership before} - \text{founder ownership after}$

The equivalent ownership relationship is:

$\text{investor ownership} = \frac{\text{investment}}{\text{post-money valuation}}$

These formulas are the exact formulas in the form. There is no hidden discount, warrant coverage, note conversion, option-pool shuffle, or liquidation preference math in the output.

Example: comparing pre-money and post-money valuation

Use the default inputs: $500,000 investment, 20% investor equity, and 100% founder ownership before the round. First convert investor equity:

$\text{equity decimal} = \frac{20}{100} = 0.20$

Post-money valuation is:

$\text{post-money valuation} = \frac{\text{\$}500{,}000}{0.20} = \text{\$}2{,}500{,}000$

Pre-money valuation is:

$\text{pre-money valuation} = \text{\$}2{,}500{,}000 - \text{\$}500{,}000 = \text{\$}2{,}000{,}000$

Founder ownership after the round is:

$\text{founder ownership after} = 100\% \times (1 - 0.20) = 80\%$

Dilution is:

$\text{dilution} = 100\% - 80\% = 20\%$

The form’s note therefore reads that $500,000 for 20% implies a $2,000,000 pre-money valuation and a $2,500,000 post-money valuation. If the founder ownership before the round were entered as 60% instead, founder ownership after would be 48% and dilution would be 12 percentage points.

How founders and investors use the result

Founders use pre-money valuation to understand how much of the company they sell for a given amount of runway. A higher pre-money valuation usually means less dilution for the same investment, but it can also create a higher expectation for the next round. Investors use post-money valuation to compare ownership price with traction, market size, risk, and expected fund return. Both sides use the implied ownership percentage to check whether the investment size is large enough to fund the plan.

The calculation is also a negotiation translation tool. One party may quote “a $2 million pre” while another quotes “$500,000 for 20%.” Those statements describe the same priced-round arithmetic. If the investor asks for 25% for the same $500,000, post-money valuation falls to $2,000,000 and pre-money valuation falls to $1,500,000. If the investment rises to $750,000 at the original 20%, post-money valuation rises to $3,750,000 and pre-money valuation becomes $3,000,000.

The result should be reviewed together with runway. A financing that causes more dilution may still be better if it gives the company enough time to reach a much stronger milestone. A financing with less dilution may be dangerous if it leaves the business undercapitalized. Use the valuation output alongside burn rate, hiring budget, revenue plan, and milestone schedule.

Caveats before relying on the number

Real cap tables often include terms that are not visible in this simple formula. Option pools may be expanded before or after the financing, which changes who bears dilution. Convertible notes and SAFEs may convert into shares at discounts, valuation caps, or most-favored-nation terms. Preferred stock may include liquidation preferences, dividends, anti-dilution provisions, voting rights, pro rata rights, board seats, or protective provisions. Those terms can make two rounds with the same headline valuation economically different.

Valuation is also negotiated rather than calculated from one universal model. Comparable companies, revenue growth, margins, customer concentration, intellectual property, market risk, and investor demand all influence price. Treat this calculator as the arithmetic layer: it shows what a stated investment and ownership percentage imply, then lets founders and investors discuss whether the deal terms make sense.

Formula sources and scope

• Principles of Finance — OpenStax, Rice University (peer-reviewed open textbook); 2022 first edition, ISBN 978-1-951693-54-1; Jurisdiction-neutral finance definitions. Supports: postMoney=investment/(investorEquity/100); preMoney=postMoney-investment; dilution=founderOwnershipBefore×investorEquity/100. Accessed 2026-07-09.

These sources support the stated formula or definition. Results remain estimates based on the entered values and do not replace financial, legal, tax, lending, or investment advice. Compare periods, units, accounting definitions, and jurisdiction-specific rules before acting.

Sources

• CFI, Pre-Money Valuation — definition and use of pre-money valuation.
• CFI, Post-Money Valuation — relationship between investment, ownership, and post-money value.
• Y Combinator, A Guide to Seed Fundraising — founder-focused fundraising context.
• SBA, Write your business plan — planning guidance for financial projections and funding needs.