Say a company raises 10 from an external VC who gets a 20% stake in the company. At the same time the company owner (who already own a majority in the company) puts in 2 in the company. Is the post money valuation 10/20% = 50 or is it 50+ 2 = 52?
Likewise is the pre-money valuation 50-10 = 40 or 50-10-2 = 38 or 52-12 = 40?
| +86 | Nothing to do at work & bored to hell | 9 | 13m |
| +67 | Do people over-index on 'moats' | 20 | 22h |
| +51 | Predicted Net Worth in Trodden Finance Path by 60? | 20 | 17m |
| +42 | Biggest (avoidable) failures in PE Investments? | 23 | 1d |
| +38 | Why is ROIC never really a topic when looking at companies IRL | 11 | 3d |
| +26 | SGE Final Round (Investment Summer Analyst) - Case Study & Technicals? | 13 | 6d |
| +19 | Senior IR Lifestyle | 3 | 5d |
| +12 | How to approach Buyside Recruiting | 3 | 4d |
| +12 | NY LMM PE Recruiting | 3 | 18h |
| +12 | Honest opinions needed about lateraling | 4 | 1d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Assuming you mean that the VC invests 10 of a 12 round, where the owner puts in the other 2, post money would be 50. 10/50 = 20% of the company,
Pre-money would be post less the full investment amount, so 50-10-2 = 38
Thanks Cali... Just thinking... if I keep the question same for the most part and just change the amount that the owner now puts in as 45 (so that the total fund round is now 55: 45 of the owner + 10 of the VC), then the pre-money becomes negative which doesn't make sense. Very very hypothetical, but is something wrong with that logic? Seems like the post money value is completely independent of how much money the owner puts ...
Est ipsa eius inventore eligendi voluptate nam perferendis cum. Esse voluptate cumque vel eum placeat et. Est totam totam ex eveniet eligendi amet.
Nihil fugiat cum reprehenderit hic. Aut aliquid eum nemo dolores quaerat autem.
Provident nihil facere qui alias quasi id. Odio enim voluptatem at illum expedita et. Porro beatae inventore rerum sequi aut. Vel omnis architecto deleniti deleniti. Quis alias dolore tempora sed mollitia assumenda qui. Qui numquam repellat voluptas ea atque voluptatem. Et vel id quia.
Expedita necessitatibus praesentium omnis quidem. Dolor similique voluptatem doloribus.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...