Pre-money Valuation - Round A

Round A

Shareholders of Widgets, Inc. own 100 shares, which is 100% of equity. If an investor makes a $10 million investment (Round A) into Widgets, Inc. in return for 20 newly issued shares, the implied post-money valuation is:

$10 million * (120 / 20) = $60 million

This implies a pre-money valuation equal to the post-money valuation minus the amount of the investment. In this case, it is:

$60 million – $10 million = $50 million

The initial shareholders dilute their ownership to 100/120 = 83.33%.

Read more about this topic:  Pre-money Valuation

Famous quotes related to round a:

    “All round and round does the world lie as in a sharp-shooter’s ambush, to pick off the beautiful illusions of youth, by the pitiless cracking rifles of the realities of age.”
    —Herman Melville (1819–1891)

    “Violence upon the roads: violence of horses;
    Some few have handsome riders, are garlanded
    On delicate sensitive ear or tossing mane,
    But wearied running round and round in their courses
    All break and vanish, and evil gathers head:
    Herodias’ daughters have returned again.”
    —William Butler Yeats (1865–1939)

    “In the land of turkeys in turkey weather
    At the base of the statue, we go round and round.
    What a beautiful history, beautiful surprise!
    Monsieur is on horseback. The horse is covered with mice.”
    —Wallace Stevens (1879–1955)