Enter the invested dollar amount and the percentage of equity an investor receives into the calculator to determine the pre-money valuation.

## Pre-Money Valuation Formula

The following formula is used to calculate a pre-money valuation.

PreMV = (I / (E/100)) – I

• Where PreMV is the pre-money valuation ($) • I is the investment amount ($)
• E is the equity received for the investment (%)

## Pre-Money Valuation Definition

A pre-money valuation is defined as the value of a company not including any of the latest rounds of funding. In other words, the worth of the company before it receives investments or funding.

## Exampe Problem

How to calculate a pre-money valuation?

First, determine the total investment someone is looking to put into the company. For this example problem, we are looking at a very early-stage tech company that has not received any funding. An investor comes in and would like to invest $2,000,000 into the company. Next, determine the equity percentage the investor seeks to receive for the investment. In this case, the investor would like a 20% stake for their funding. Finally, calculate the pre-money valuation using the formula above: PreMV = (I / (E/100)) – I = (2,000,000/(20/100)) – 2,000,000 =$8,000,000.00

From the information above, we can also calculate the post-money valuation. That is done using the formula:

PostMV = I/(E/100)

= \$10,000,000.00