Simon Willison’s Weblog

If a startup has raised 10M, how much is it worth?

21st November 2013

My answer to If a startup has raised 10M, how much is it worth? on Quora

That depends on how much equity they sold for that $10 million.

If they sold a 20% stake in their company for $10 million, their company’s post-money valuation is $60 million.

Why $60m? Because they sold 20% of the company for $10m, indicating that 100% of the company is worth $50m (this is called their pre-money valuation). BUT... they also get to add that $10m in cash they just raised to their balance sheet, so the total valuation of the company (the post-money valuation) is $60m.

Often when a company raises money they will announce the amount raised but NOT the new valuation—this is particularly common with early-stage startups. You can’t figure out the valuation from the amount they raised on its own.