Pre-money...post-money? 🤔 🤯

Let’s understand some valuation concepts. The pre-money value of your company is the value right before the next funding round – this is what you are trying to figure out. Post-money value is the value of the company after the investor’s investment.

Post-money value = Pre-money value + Investment amount

The investor’s ownership of your company is expressed as percent of post-money value.

Investor’s % ownership = Investment amount

Post-money value

You can flip around the same formulas and calculate how much an investor is valuing your startup when they make you an offer (post-money value equals the investment amount divided by ownership %, and pre-money value equals post-money less the investment). So, when an investor offers you £1 million for 20% of your company, his post-money valuation is £5 million (and the pre-money value is £4 million).