How do you come up with a pre-money valuation?

How to Calculate Pre-Money Valuation

1. Pre-money valuation = post-money valuation – investment amount.
2. Pre-money valuation = investment amount / percent equity sold – investment amount.
3. Pre-money valuation (option 1) = post-money valuation ($11,000,000) – investment amount ($1,000,000)

How do you calculate pre-money valuation per share?

Per Share Price The price per share of the Series A Preferred Stock that the venture capital investor is willing to pay is equal to the pre-money valuation of the company divided by the total number of shares outstanding.

Should I use pre-money or post-money valuation?

Although post-money valuations are simpler, pre-money is more commonly used. Pre-money valuations can flex so much because of the timing and number of factors in place that could affect the valuation in any given scenario.

Is debt included in pre-money valuation?

Pre-money valuations are calculated net of any debt, as when calculating net worth. However, any previous funding that was structured as debt with the ability to convert to equity during this funding round will not typically be counted as debt and taken out of your pre-money valuation.

Do you calculate ownership on pre or post-money?

The ownership percentages will depend on whether this is a $1 million pre-money or post-money valuation. If a company is valued at $1 million, it is worth more if the valuation is pre-money than if it is post-money because the pre-money valuation does not include the $250,000 invested.

How is a valuation calculated?

It is calculated by multiplying the company’s share price by its total number of shares outstanding. For example, as of January 3, 2018, Microsoft Inc. traded at $86.35. 1 With a total number of shares outstanding of 7.715 billion, the company could then be valued at $86.35 x 7.715 billion = $666.19 billion.

How do you calculate pre tax amount?

To calculate pre-tax income, use the following formula: pre-tax operating income = gross revenue – operating expenses – depreciation. The pre-tax operating income is the operating income of a company before taxes. Simply put, a company can find its pre-tax income by subtracting its total expenses from the total revenue.

What does pre money valuation mean?

A pre-money valuation is a term widely used in private equity or venture capital industries, referring to the valuation of a company or asset prior to an investment or financing.

What is pre and post money valuation?

Post-money valuation is a way of expressing the value of a company after an investment has been made. This value is equal to the sum of the pre-money valuation and the amount of new equity.

What is pre money value?

Pre-money value is a metric used by investors that tells them the price of their investment without having to know the number of shares outstanding. Pre-money value refers to the pre-investment value of the enterprise that is implied by the per-share price of the stock being offered and the number of shares outstanding.