Pre Money Valuation Calculator
I built this tool to help founders understand what their startup is worth BEFORE taking investment. Stop guessing—know your numbers and negotiate with confidence.
Pre Money Valuation Calculator
Calculate Your Startup's Valuation Before Investment
Amount the investor is putting in.
Ownership percentage the investor receives.
Optional: For calculating price per share.
20% equity → $1,000,000 investment
Pre-Money Valuation
Your startup's worth BEFORE investment
Valuation Breakdown
Ownership Structure
Pre Money Valuation Calculator in 3 Simple Steps
I've made pre-money valuation dead simple. Here's how it works:
1. Enter Investment Terms
Input the investment amount the investor is offering and the equity percentage they want in return. This is typically found in your term sheet.
2. We Calculate Valuations
The calculator instantly computes your pre-money valuation (company worth before investment) and post-money valuation (worth after investment).
3. Review Your Equity
See exactly how much you'll own after the deal, your dilution, price per share (if you provide share count), and whether the terms are fair.
Why I Built This Pre Money Valuation Calculator
When I first started raising money for my startup, I made a critical mistake: I focused entirely on the investment amount and barely thought about valuation. Big mistake.
An investor offered me $500K for 25% of my company. I was excited about the money and said yes. Only later did I realize that by accepting those terms, I was valuing my company at just $1.5M pre-money—and giving away too much equity too early.
I built this calculator so you don't make the same mistake. Understanding pre-money vs. post-money valuation is essential for negotiating fair deals and protecting your ownership as you build your company.
Pre-Money vs. Post-Money Valuation: The Critical Difference
These two terms confuse a lot of founders, but they're actually pretty simple. Let me break it down:
Pre-Money Valuation
What your company is worth BEFORE the investment.
This is the value assigned to your startup before new money comes in. It's based on your traction, team, market opportunity, and assets you've already built.
Formula:
Pre-Money = Post-Money - Investment
Post-Money Valuation
What your company is worth AFTER the investment.
This includes your pre-money value PLUS the new investment cash. It's what investors think your company will be worth with their capital and help.
Formula:
Post-Money = Investment ÷ Investor Equity %
Real Example: How It Works
Let's say an investor offers you $1M for 20% equity. Here's what that actually means:
Step 1: Investor wants 20% → Post-money valuation = $1M ÷ 0.20 = $5M
Step 2: Your pre-money valuation = $5M - $1M = $4M
Step 3: You keep 80% = 80% of $5M post-money = $4M worth of shares
So before the investment, your company is worth $4M. After adding $1M, it's worth $5M. You own 80% ($4M worth), investor owns 20% ($1M worth).
The Formulas Behind Pre Money Valuation
You don't need to be a math genius to understand startup valuation. There are just two key formulas:
Formula 1: Post-Money Valuation
Post-Money = Investment ÷ Equity %
If an investor puts in $2M for 25% equity, your post-money valuation is $2M ÷ 0.25 = $8M.
Formula 2: Pre-Money Valuation
Pre-Money = Post-Money - Investment
If post-money is $8M and investment is $2M, your pre-money valuation is $8M - $2M = $6M.
💡 Pro Tip: The Hidden Number
The pre-money valuation is the number that really matters. It's what investors think your business is worth today, before their money. When negotiating, focus on increasing this number—not just the investment amount.
Understanding Equity Dilution
Every time you raise money, your ownership percentage decreases. This is called dilution. But here's the thing—dilution isn't necessarily bad if the company's value is increasing.
Example: Dilution Across Funding Rounds
| Round | Investment | Pre-Money | Your Equity | Your Stake Value |
|---|---|---|---|---|
| Starting | $0 | — | 100% | $0 |
| Seed | $1M | $4M | 80% | $4M |
| Series A | $5M | $20M | 64% | $16M |
| Series B | $15M | $60M | 51% | $38M |
Notice: Even though your ownership dropped from 100% to 51%, the value of your stake increased from $0 to $38M. That's why dilution can be a good thing—you own a smaller slice of a much bigger pie.
⚠️ The Danger: Down Rounds
A "down round" happens when your pre-money valuation is lower than your previous post-money valuation. Example: If you raised at $10M post-money last year, and now investors value you at $8M pre-money, that's a down round. It hurts morale, makes future fundraising harder, and can trigger anti-dilution protections for early investors.
Average Pre-Money Valuations by Stage (2026)
So what should YOUR pre-money valuation be? Here are typical ranges I'm seeing in 2026:
Pre-Seed
Idea stage, team in place, maybe MVP
$500K - $2M
Pre-Money
Typical investment: $100K - $500K for 10-25% equity
Seed
Product launched, early traction, revenue <$500K
$2M - $8M
Pre-Money
Typical investment: $500K - $2M for 15-25% equity
Series A
Proven product, $1M-$5M ARR, growth engine working
$10M - $30M
Pre-Money
Typical investment: $3M - $15M for 15-25% equity
Series B
$5M-$20M ARR, scaling, hiring aggressively
$30M - $80M
Pre-Money
Typical investment: $10M - $30M for 15-25% equity
Series C+
$20M+ ARR, market leader, IPO prep
$100M - $500M+
Pre-Money
Typical investment: $20M - $100M+ for 10-20% equity
Note: These are averages. Top startups (e.g., Y Combinator companies, AI startups with founders from Google/OpenAI) can raise at 2-5x these numbers. Struggling startups might raise at 50% of these ranges. Location (Silicon Valley vs. elsewhere) and industry also matter significantly.
How to Increase Your Pre-Money Valuation
Want a higher valuation? Who doesn't. Here's what actually moves the needle with investors:
1. Show Revenue Growth (The #1 Driver)
Nothing beats actual revenue. $10K MRR growing 20% month-over-month will get you a better valuation than a great idea with $0 revenue. Investors pay for traction, not potential.
2. Reduce Churn
If you have subscribers, demonstrate low churn (less than 5% monthly for B2C, less than 2% for B2B). Low churn proves customers love your product and increases predictability.
3. Build a Strong Team
Investors bet on people. Having a technical co-founder, experienced advisors, or a team with previous exits can double your valuation. I've seen this firsthand.
4. Create Competitive Tension
If multiple investors want in, your valuation goes up. Always try to generate FOMO (fear of missing out). Even having one warm intro can increase leverage.
5. Time Your Raise Right
Raise when you have 6+ months of runway left. Desperation = lower valuation. Also, raise after hitting a milestone (product launch, key hire, revenue milestone)—not before.
6. Demonstrate Unit Economics
Show that your CAC (customer acquisition cost) is less than LTV (lifetime value). Prove you can profitably acquire customers. This is huge for SaaS and marketplace businesses.
🚀 Pro Tip: The "Hot Sector" Premium
In 2026, AI/ML startups, climate tech, and biotech are getting 2-3x higher valuations than other sectors at the same stage. If you can position your startup in a hot category (without being misleading), you'll command a premium.
Frequently Asked Questions
What is a good pre-money valuation for a startup?
There's no single 'good' number—it depends on your stage, industry, location, and traction. For seed-stage startups in 2026, a typical range is $2M-$8M pre-money. Pre-seed is typically $500K-$2M. Series A is usually $10M-$30M. Top startups in hot sectors (AI, fintech) can raise at 2-5x these numbers. Use this calculator to see what your terms imply about your valuation, then research comparable startups in your industry.
Is a higher pre-money valuation always better?
Not necessarily. A high pre-money valuation can set unrealistic expectations for future rounds. If you raise at a $20M pre-money seed but don't grow enough to justify a $40M+ Series A, you might face a down round (which is very painful). Also, higher valuations mean more dilution for you and your employees. Sometimes it's better to accept a slightly lower valuation from a top-tier investor who can help you succeed.
How do I calculate pre-money valuation from a term sheet?
Look at two numbers: (1) Investment amount and (2) Investor equity percentage. Use the formula: Post-Money = Investment ÷ Equity%. Then subtract the investment to get pre-money. Example: Investor offers $2M for 20%. Post-money = $2M ÷ 0.20 = $10M. Pre-money = $10M - $2M = $8M. That's your valuation before their money.
What's the difference between pre-money and post-money valuation?
Pre-money valuation is what your company is worth BEFORE new investment. Post-money is what it's worth AFTER adding the investment. Pre-money reflects the value of what you've built so far. Post-money includes the new cash and represents the value investors expect you to create with their capital. If you raise $1M at a $4M pre-money, your post-money is $5M.
How much equity should I give investors in the seed round?
The typical range is 15-25% for a seed round. Giving away less than 10% might not be enough to justify the investor's time. Giving away more than 30% leaves you with too little equity to motivate founders and employees for future rounds. I recommend aiming for 20% if you can—it's a balanced middle ground. Remember: you'll dilute further in Series A, B, C, so preserve equity early.
What is an option pool and how does it affect my valuation?
Investors often require you to create an employee option pool (typically 10-20% of post-money) BEFORE they invest. This pool comes out of YOUR equity, not theirs. Here's why it matters: If your pre-money is $4M and investors want a 20% option pool, your effective pre-money is only $3.2M after setting aside the pool. Always negotiate whether the option pool is included in the pre-money or created post-investment.
How do I negotiate a higher pre-money valuation?
First, generate competitive interest—multiple investors = better terms. Second, show traction: revenue growth, user growth, partnerships, waitlists. Third, demonstrate team strength (previous exits, technical expertise). Fourth, time your raise when you have leverage (after a milestone, with 6+ months runway). Finally, know your BATNA (best alternative)—if you have a strong backup plan, negotiate harder.
What is a down round and should I avoid it?
A down round is when you raise at a LOWER valuation than your previous round. Example: You raised at $10M post-money last year, and now investors only value you at $8M pre-money. Down rounds are painful—they demoralize employees, trigger anti-dilution clauses for early investors, and hurt future fundraising. However, sometimes taking a down round is better than running out of cash. If you must do a down round, try to get existing investors to support you and frame it as a 'recapitalization' rather than failure.
How does convertible debt (SAFE) affect pre-money valuation?
Convertibles (like Y Combinator's SAFE) don't set a pre-money valuation immediately—they delay it to a future priced round. Instead, they have a 'valuation cap' which acts as a maximum pre-money for when they convert. Example: You raise $500K on a $5M cap with a SAFE. Later you raise a priced round at $8M pre-money. The SAFE converts as if the valuation was $5M (the cap), giving investors more equity. If the next round is $4M pre-money, the SAFE converts at $4M (lower of cap or actual).
Can I raise money at different valuations from different investors?
In the same round? No—that would be unfair and legally problematic. All investors in a single round should get the same terms. However, you CAN raise at different valuations at different times. Example: Raise $500K at $2M pre-money from angels (pre-seed), then 6 months later raise $2M at $6M pre-money from VCs (seed). This is normal and expected as you build traction. Just don't have overlapping rounds with conflicting terms.
Related Calculators
🏢 Business Valuation Calculator
Estimate the value of an established business using SDE or EBITDA multiples. Perfect for main street businesses and companies with actual revenue.
Calculate Business Value →📊 Stock Valuation Calculator
Calculate the intrinsic value of public stocks using DCF analysis. Great for investing your startup exit proceeds.
Calculate Stock Value →Ready to Understand Your Valuation?
Don't enter fundraising blindly. Use my calculator to understand the terms, then negotiate with confidence. Your equity is valuable—protect it.
Calculate My Pre-Money Valuation