The equity value of a company before it receives cash from a round of financing.
What is pre-money equity value?
A company's pre-money value is simply the amount that an investor and the company agree to deem the company to be worth immediately prior to the investor's investment, for the purpose of determining how much the investor will pay per share for the stock it is purchasing.
How do you calculate pre-money equity value?
How to Calculate Pre-Money Valuation
- Pre-money valuation = post-money valuation – investment amount.
- Pre-money valuation = investment amount / percent equity sold – investment amount.
- Pre-money valuation (option 1) = post-money valuation ($11,000,000) – investment amount ($1,000,000)
