Know Your Valuation Floor Before You Negotiate
This founder-first calculator flips the typical valuation conversation. Instead of starting with a valuation and calculating dilution, you start with your goals: how much you want to raise and how much ownership you want to keep. The calculator then tells you the minimum pre-money valuation you need to negotiate for. Armed with this number, you can confidently evaluate term sheets and know exactly when to walk away.
Required Pre-Money Valuation
$8.00M
Price Per Share
$8
New Shares Issued
250.0K
If your current pre-money valuation is $5,000,000, and you want to raise $2,000,000 while keeping 64% of the shares, you would need to issue 250,000 new shares at $8 per share. This would require a pre-money valuation of $8,000,000. You would need to increase your pre-money by $3,000,000 to hit your ownership target.
When negotiating with investors, founders often focus on the investment amount without realizing the pre-money valuation they need to protect their stake. By starting with your ownership goal, you can work backwards to determine the minimum pre-money valuation you should accept. This founder-first approach puts you in control of the negotiation.
The math connects your ownership goals to concrete share-level terms. If you currently own 80% of 1M shares and want to keep 64% after raising $2M, the calculator determines you need 250K new shares at $8/share, implying an $8M pre-money. Compare this to your current pre-money valuation to see if you need to justify a higher number to investors.
Required Pre-Money Valuation
$8.00M
Price Per Share
$8
New Shares Issued
250.0K
If your current pre-money valuation is $5,000,000, and you want to raise $2,000,000 while keeping 64% of the shares, you would need to issue 250,000 new shares at $8 per share. This would require a pre-money valuation of $8,000,000. You would need to increase your pre-money by $3,000,000 to hit your ownership target.
When negotiating with investors, founders often focus on the investment amount without realizing the pre-money valuation they need to protect their stake. By starting with your ownership goal, you can work backwards to determine the minimum pre-money valuation you should accept. This founder-first approach puts you in control of the negotiation.
The math connects your ownership goals to concrete share-level terms. If you currently own 80% of 1M shares and want to keep 64% after raising $2M, the calculator determines you need 250K new shares at $8/share, implying an $8M pre-money. Compare this to your current pre-money valuation to see if you need to justify a higher number to investors.
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Most founders approach fundraising backwards. They wait for investors to propose a valuation, then calculate the resulting dilution. This reactive approach puts founders at a disadvantage because they lack a clear benchmark for what constitutes a good deal. By starting with your ownership goals and working backwards to the required valuation, you flip the dynamic. You walk into every investor meeting knowing exactly what valuation you need and can immediately evaluate any offer against your target. This founder-first approach transforms fundraising from a passive exercise into an active negotiation where you control the terms.
The mathematics behind this calculator reveal why valuation differences matter so much. If you want to keep 80% ownership after raising $2M, investors get 20% for their $2M. That means post-money must be $10M ($2M divided by 20%), and pre-money must be $8M. But if you accept a $6M pre-money instead, post-money becomes $8M, and investors get 25% rather than 20%. That 5 percentage point difference compounds across multiple rounds and can cost you millions at exit. Understanding these mechanics before negotiations gives you the clarity to hold firm on valuations that protect your long-term ownership.
This calculator also helps you set realistic expectations based on market conditions. If raising $3M while keeping 75% ownership requires a $9M pre-money valuation, but comparable companies in your space are raising at $5-6M pre-money, you have a decision to make: raise less money, accept more dilution, or wait until you can justify a higher valuation. Having this clarity before you start fundraising prevents wasted time pursuing unrealistic terms and helps you plan your capital strategy around achievable milestones.
Solo founder who owns 100% wants to raise $2M while keeping 80% ownership.
To keep 80% ownership, you need an $8M pre-money valuation at $8/share, issuing 250K new shares. Your current pre-money is $5M but you need $8M—you must justify a $3M increase to hit your ownership target.
Founder who owns 80% after seed round wants to raise $5M while keeping 64% total ownership.
To keep 64% ownership, you need a $20M pre-money at $16/share, issuing 312.5K new shares. Your current $15M pre-money is close—you need a $5M increase to hit your target.
Founder with $3M current pre-money wants to raise $2M while keeping 75%.
To keep 75%, you need a $6M pre-money at $6/share. Your current pre-money is $3M but you need $6M—either justify the increase, raise less, or accept more dilution.
Co-founder owns 40% of the company and wants to retain 32% after a $3M raise.
To keep 32% (from your current 40%), you need a $12M pre-money at $6/share, issuing 500K new shares. Your current $10M pre-money is $2M short of what you need.
Your target ownership depends on your fundraising stage, growth plans, and how many future rounds you anticipate. At seed stage, most founders target 75-85% retention to preserve equity for Series A, B, and beyond. If you plan to raise multiple rounds before exit, model your ownership trajectory: keeping 80% at seed, 70% of that at Series A (56% total), and 75% of that at Series B (42% total) shows how dilution compounds. Work backwards from your desired exit ownership to determine each round target. Also consider that maintaining majority control (>50%) may matter for decision-making authority. Some founders accept higher dilution for strategic investors who add significant value beyond capital. The key is making this decision intentionally rather than accepting whatever investors propose.
If your required valuation exceeds market norms for your stage and traction, you have three options. First, raise less money and extend your runway through capital efficiency, hitting milestones that justify higher valuations later. Second, accept more dilution by adjusting your ownership target to match achievable valuations. Third, delay fundraising until you can demonstrate metrics that support your target valuation. The calculator helps you see these tradeoffs clearly. If keeping 80% while raising $3M requires a $12M pre-money but comparable companies raise at $6-8M, you might target 70% ownership instead (requiring ~$7M pre-money) or raise only $1.5M at $6M pre-money to keep 80%. Use this analysis to set realistic expectations before you start investor conversations.
This calculator shows the direct relationship between investment, ownership, and valuation. Option pools add additional complexity because investors typically require pools to be created from pre-money valuation, diluting founders further before investment shares are issued. If investors require a 15% option pool on top of their ownership, your effective dilution increases. For example, if you target 80% ownership after a $2M raise (requiring $8M pre-money), but investors require a 15% post-money pool from pre-money, your actual ownership drops to around 68%. Account for this by targeting higher ownership in the calculator to offset pool dilution, or negotiate pool sizing, timing, and treatment as part of your term sheet discussions.
Having a target valuation does not mean you should open negotiations by stating it. Your required valuation is your internal benchmark for evaluating offers, not necessarily your opening position. Start by understanding what investors think your company is worth through their questions about metrics, comparables, and growth plans. If their proposed valuation meets or exceeds your target, you can negotiate from a position of strength. If their offer falls short, you know exactly how far apart you are and can decide whether to negotiate, find other investors, or wait. Some founders do share target ranges to filter investors quickly, but be prepared to justify any number you state with metrics, comparables, and a compelling growth narrative.
Run the calculator with your target ownership percentage and raise amount to establish your baseline required valuation. Then compare each term sheet offer against this benchmark. If you want to keep 75% while raising $2.5M (requiring ~$7.5M pre-money), any offer below $7.5M pre-money dilutes you more than planned. But valuation is not the only factor. Compare effective valuations after accounting for option pool requirements, liquidation preferences, participation rights, and other terms. A $8M pre-money with a 20% option pool requirement may actually be worse than a $7M pre-money with a 10% pool. Use the calculator to establish your baseline, then layer in these additional considerations when evaluating real offers.
The valuation you need to hit ownership targets may differ from what investors believe your company is worth based on metrics and comparables. This gap reveals important information. If your required valuation significantly exceeds market pricing, you may need to either accept more dilution, raise less, or improve your metrics before raising. If your required valuation is below market pricing, you have negotiating leverage to potentially keep more ownership. Early-stage valuations are largely negotiated rather than calculated from fundamentals. Strong founders with compelling narratives, competitive investor interest, or scarce deal flow can command premiums. Use this calculator to set your target, then work to justify that valuation through traction, team, market, and competitive dynamics.
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