In most cases that I have seen in my 10 year entrepreneurial journey, first time Entrepreneurs do
Even I didn’t know a word about this when I started, but not for long, as Alok was there to my rescue.
The mathematics of valuations is not very complicated. A few terms to understand it are:
- Pre-Money: This is a number which defines the current valuation of your company. This is generally decided by the Investor. It’s the amount the Investor feels the company is worth.
- Investment: The amount of money put in the company / the Entrepreneurs wish to raise.
- Post-Investment: It is Pre-Money + Investment, that is, the valuation of your company after it is funded.
- Dilution: The amount of stake that needs to be given to the Investors (Investment/Post-investment)%
Attached here (Equity Dilution Calculator.xlsx) is a very simplified Equity Dilution Calculator which anybody can use to understand the maths that goes behind an Investment Round.
About me
I am a 35 year old first generation Tech & Internet entrepreneur. Co Founder & CEO of ideacts innovations. An Internet Media company funded by Sequoia Capital and Saama Capital. I am an Ex Mobile2win employee and possibly the first entrepreneur mentored by Alok. I am also the Author of ‘Breaking Out and Making Big’, a no-nonsense book on new age startups and entrepreneurship….
Hope it helps…
@rudrajeet
facebook.com/rudrajeet