Understanding the post-money valuation

  • A post-money valuation is the projected value of a firm after obtaining outside investment or funding.
  • The post-money value is seen as an important predictor of a company’s performance.
  • The post-money value is used by investors to calculate their ownership position in a firm.

What exactly is a Post-Money Valuation?

A post-money valuation is the projected value of a firm after obtaining outside investment or funding. So, if a company was valued £10 million before raising another £5 million, its post-money valuation would be £15 million.

Pre-money vs post-money

A simple arithmetic calculation cannot calculate the pre-money valuation. This is due to the fact that it’s susceptible to interpretation and argument among investors and entrepreneurs.

Ownership and Post-Money Valuation

A post-money valuation’s principal role is to calculate what proportion of the business the investor is acquiring.

Calculating the Post-Money Value

Knowing the post-money value can assist you in determining a variety of critical company KPIs. The difficulty is that post-money values are rarely as easy as a simple arithmetic calculation.

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Nik Nicholas

Nik Nicholas

Venture Investor @ Elbow // Practice Lead @ Radically Digital // Web3 Enthusiast