PRE-MONEY AND POST-MONEY VALUATION

Let’s assume both you and your investor have valued your early-stage startup at $100,000. Your investor is willing to contribute $25,000 to fund the growth of your company. How much equity should they get?

• If that $100,000 is a pre-money valuation, the company is valued at $100,000 before the investment. That means that the angel’s investment actually serves to increase the value of the company to $125,000, reducing their share to 20% and increasing yours to 80%.
• In both instances you’ve gained the capital you need to grow, as well as the expertise of a seasoned angel.