Valuation quotation comparison
Pre-money vs post-money: what does the quoted valuation include?
Pre-money describes equity value before the new priced-round investment; post-money includes it. “A EUR 4m valuation” is therefore incomplete. With EUR 1m of new capital, the two interpretations give a new investor 20% or 25%, even though the quoted headline number is identical.
| Measure | EUR 4m pre-money | EUR 4m post-money |
|---|---|---|
| Pre-Money | 4,000 EURk | 3,000 EURk |
| New cash | 1,000 EURk | 1,000 EURk |
| Post-Money | 5,000 EURk | 4,000 EURk |
| Price per share | 4 EUR | 3 EUR |
| New shares | 250,000 | 333,333.333 |
| New investor after the round | 20% | 25% |
| Existing holder after the round | 80% | 75% |
On this page
Translate the quotation before calculating a stake
For a simple primary round, post-money = pre-money + new investment. Read backwards, pre-money = post-money − new investment. New-investor ownership = investment / post-money when the investor has no prior shares and the pricing and ownership denominators are aligned.
The distinction is about what is included in the quotation. It does not select a valuation method or validate the negotiated amount. Both terms refer here to Equity Value, not Enterprise Value. Carta’s explanation of priced-round terminology provides the external definition; the examples below are calculated by the native transaction engine.
Same investment, two different issue prices
Both cases start with 1,000,000 existing common shares, no treasury or pool, equal rights and EUR 1m new primary cash. If the quotation is EUR 4m pre-money, the price is EUR 4 per share and the new investor receives 250,000 shares: 20% of the 1,250,000 closing shares.
If EUR 4m is post-money, subtract the EUR 1m investment first. Pre-money is EUR 3m, price is EUR 3 and new shares are 333,333.333… . The investor owns 25% of 1,333,333.333… shares. Fractional shares are retained in the model; the table rounds for reading, without inventing a legal share-rounding rule.
In EURk, the monetary assumptions are 4,000, 3,000 and 1,000 as appropriate. Prices are EUR per individual share, and share counts remain separate. A currency display change does not turn EUR 4 per share into EUR 4k per share.
Resolve four ambiguities in the quoted number
| Question | Why the answer matters |
|---|---|
| Before or after the new primary cash? | Determines whether investment is added or subtracted to recover the other value |
| Which shares form the pricing denominator? | An included pool can change the issue price at the same pre-money value |
| Is the cash primary issuance or a secondary holder sale? | The simple company cash and post-money bridge here assumes primary issuance |
| Are prior investor holdings or unequal rights present? | A purchase percentage is not necessarily the holder’s total stake or economic payout |
Recognize where the simple comparison ends
A post-money quotation at or below the proposed investment implies zero or negative pre-money under this bridge. That is not a positive implied issue price for the illustrated native round. Resolve the input or use a different, explicitly supported transaction structure rather than forcing the percentage formula.
The table excludes fees, convertibles, SAFEs and preference waterfalls. A reserved option pool is also absent: introduce it explicitly when it is part of the terms. Pre-money/post-money terminology alone does not define that pool treatment.
Move from a clear quotation to the transaction
Use the funding-round workflow once the quotation is unambiguous. The EUR 4m pre-money example and EUR 4m post-money example reproduce the two columns through explicit import. Their native setup stores the pre-money values needed for pricing.
The funding-round reference and equity-issuance reference explain fields and pricing bases. This comparison does not recommend which quotation is fair or how legal deal terms should be drafted.
Sources and conventions
Synthetic examples. Model-based results were reconciled with the current BalanceCheat calculations; assumptions, units and boundaries are specified in each example.