From Crowdfunding Tools

Pre-Money vs Post-Money Valuation

Pre-money and post-money valuation are terms that are used to describe the value of company before and after a round of investment.

Pre-money valuation is the value of a company before it receives new cash in exchange for an equity stake. The post-money valuation will take into consideration the new cash and the impact of the amount of equity offered has had on the valuation of the company.

The post-money valuation is typically used as the ‘price’ element for valuation ratios such as price-to-earnings, price-to-book and price-to-sales.

Crowdfunding Calculator: Price-to-Earnings Ratio

This simple and extremely useful calculator is aimed at investors who are analysing a company raising funds by crowdfunding.

The Price-to-Earnings (PE) ratio of a company, either private or public, is one of the most widely used valuation methods.

It values a company by comparing the value of a company’s shares against its earnings (usually net profit) in a 12-month period.

For publicly traded companies it is relative simple to calculate a company’s value using the share price and the number of shares outstanding. However, when an investor is analysing a privately held company the price of shares can only be valued reasonably by a recent or upcoming round of funding.

A company using a crowdfunding platform will be required to set out the amount they want to raise and the level of equity they are willing to give investors in return.

By taking the target funds to be raised and equity offered along with net profit forecasts to you can calculate the PE Ratio of a company.

When you have used the Investment Superstore Price-to-Earnings Calculator you can compare your findings against the readings of similar listed companies to evaluate the relative value of a private company raising funds by crowdfunding.

In addition to the Price-to-Earnings ratio, you can also use our Price-to-Book & Price-to-Sales calculators.

If the company you are researching is offering a an equity stake that runs past two decimal point or you need a more exact calculation that is not available on the above calculator, you can use a version of the above calculator that replaces the ‘equity offered’ slider.

Other Useful Crowdfunding Calculators:

Crowdfunding Calculator: Price-to-Sales Ratio

The Price-to-Sales ratio of a company is a valuation method that measures the value of a company by comparing its revenue against the total value of a company. The sales element of this ratio is the headline revenue figure whilst the price element is the total valuation of a company, calculated either by the latest round of funding in an unlisted company or the price of share in listed firms.

 

In early stage companies, the Price-to-Sales is typically higher than those of more developed companies due to investors pricing in expectations of future growth.

 

When using this ratio, as with all valuation ratios, it is important the calculated price-to-book ratio is used to compare companies within the same sector and industry for the most insightful comparisons.

If the company you are researching is offering a an equity stake that runs past two decimal point or you need a more exact calculation that is not available on the above calculator, you can use a version of the above calculator that replaces the ‘equity offered’ slider.

Other useful Crowdfunding valuation calculators:

Crowdfunding Calculator: Price-to-Book Ratio

The Price-to-Book ratio of a company is a valuation method that measures the value of a company by comparing its revenue against the total value of a company. The ‘book’ element of this ratio is the Net Asset Value (NAV) of the company whilst the price element is the total valuation of a company, calculated either by the latest round of funding in an unlisted company or the price of share in listed firms.

In early stage companies, the Price-to-Book is typically higher than those of more developed companies due to investors pricing in expectations of future growth.

When using this ratio, as with all valuation ratios, it is important the calculated Price-to-Book ratio is used to compare companies within the same sector and industry for the most insightful comparisons.

If the company you are researching is offering a an equity stake that runs past two decimal point or you need a more exact calculation that is not available on the above calculator, you can use a version of the above calculator that replaces the ‘equity offered’ slider.

Other useful Crowdfunding valuation calculators: