Big News: FounderDating is joining OneVest to build the largest community for entrepreneurs. Details here
Latest Notifications
You have no recent recommendations.
Name
Title
 
MiniBio
FOLLOW
Title
 Followers
FOLLOW TOPIC

Question goes here

1,300 Followers

  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur
  • Name
    Entrepreneur

Pre/Post Money valuation models? Specific example to discuss for reference.

So if you are shooting to give up 20% of the company for $2MM, does that mean you should have a $10MM pre money valuation, or a $10MM post money valuation? I have heard conflicting answers in talking with friends about this. Should be simple enough, just want to confirm with peers...

12 Replies

George Arison
1
0
George Arison Entrepreneur • Advisor
Making car buying, selling, and ownership a delightful experience
12M post money valuation with 20% will lead to $2.4M in funding.

10M post money valuation with 20% will lead to $2M in funding.

At least thats how I have done these, always.


Gerald Morton
0
5
Gerald Morton Entrepreneur
Director at Ministry of Education, British Columbia
I will be out of the office from March 16 to March 25. Please contact Ian Rongve for inquiries regarding the Applied Research..
Vadim Oss
0
0
Vadim Oss Entrepreneur • Advisor
Co-founder at Rentini
Although it's an old article but you ca still dig into more detail here:http://venturehacks.com/articles/seed-valuation
Dave Sifry
2
0
Dave Sifry Entrepreneur • Advisor
Head of Product at Addapp Corp
Chris,

At those numbers, an $8M Pre-money valuation and a $10M post money valuation will sell 20% of the company to the investors.

If you're really good, try to carve out the option pool after the new money comes in, but savvy investors will force you to have an option pool that is carved out prior to the investment. :)
Michael L Atkinson
1
0
Michael L Atkinson Entrepreneur
Investor | Advisor | Entrepreneur - Restaurant Technology
Always post Money. So if pre is $8 + raise of $2= $10 post Michael L. Atkinson Chairman (408) 335-6758 Twitter @michaelatkinson Twitter @fohboh
Brad Miller
0
0
Brad Miller Entrepreneur
Healthcare Data, Strategy and Operations
Assuming no other discounts or caveats, you would have a post money valuation of $10MM. Pre-money = $8MM Raised = $2MM Total = $10MM $2MM/$10MM = 20% m. [removed to protect privacy]
Patrick Ford
1
0
Patrick Ford Advisor
Software Development Manager at McKesson / RelayHealth
If you want the post money investment of $2mm to equate to 20% of the equity then you would start with an $8mm pre-money valuation. Post money valuation would be $10mm ($8mm + $2mm). Patrick Ford
Vadim Oss
0
0
Vadim Oss Entrepreneur • Advisor
Co-founder at Rentini
As far as I am aware and the way I've done this in the past the amount of equity you give up to investors goes out of the post-money valuation which includes the investment itself.
Here's the calculation:
$8M pre-money
$2M investment
$10M post-money
you give up 20% equity for $2M
Chris Heuer
0
0
Chris Heuer Advisor
Futurist, serial entrepreneur and change agent
I planned the cap table for being post seed and already set aside the 20% of the pool with the other cofounders out of it. Better to set expectations early. We didnt focus on percentages with other cofounders or employees, just on shares and potential value. Makes things easier. I learned that with my first startup 20 years ago...
Scott Milburn
4
0
Scott Milburn Entrepreneur
Entrepreneurial Senior Executive and Attorney

The above answers that it is $8M pre + $2M investment = $10M post with 20% owned by the investors is correct. Note that the supposedly brilliant investors on Shark Tank always calculate it incorrectly. If someone came to them saying I'm seeking $2M for 20%, they'd say "how can you justify a $10M valuation?" The proper answer would be ""I'm not, I'm justifying an $8M valuation, and your $2M would bring that up to $10M, with $2M in assets sitting in the bank."

Join FounderDating to participate in the discussion
Nothing gets posted to LinkedIn and your information will not be shared.

Just a few more details please.

DO: Start a discussion, share a resource, or ask a question related to entrepreneurship.
DON'T: Post about prohibited topics such as recruiting, cofounder wanted, check out my product
or feedback on the FD site (you can send this to us directly info@founderdating.com).
See the Community Code of Conduct for more details.

Title

Give your question or discussion topic a great title, make it catchy and succinct.

Details

Make sure what you're about to say is specific and relevant - you'll get better responses.

Topics

Tag your discussion so you get more relevant responses.

Question goes here

1,300 Followers

  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
  • Name
    Details
Know someone who should answer this question? Enter their email below
Stay current and follow these discussion topics?