<p><b>Pre-money valuation based on </b><b>percent</b><b> of </b><b>company</b><b>.</b></p><p>Some entrepreneurs are more used to thinking in terms of offering some percent (e.g., 20%) of their company for some amount (e.g., $500K) of financing. Numerically, divide the proposed financing ($500K) by the offered percentage (20%) to get the post-money valuation ($2.5 million), and subtract the money ($500K) from the post-money ($2.5 million) to get the pre-money valuation ($2 million). Note that these are just two different ways to compute the valuation; and hence, as expected, yield the identical results.</p>

Pre-money valuation based on percent of company.

Some entrepreneurs are more used to thinking in terms of offering some percent (e.g., 20%) of their company for some amount (e.g., $500K) of financing. Numerically, divide the proposed financing ($500K) by the offered percentage (20%) to get the post-money valuation ($2.5 million), and subtract the money ($500K) from the post-money ($2.5 million) to get the pre-money valuation ($2 million). Note that these are just two different ways to compute the valuation; and hence, as expected, yield the identical results.