Pre-Money vs Post-Money: The ₹100 Crore Valuation Difference

Two term sheets can both say “₹100 crore valuation” and give the investor different ownership. The missing words are often pre-money or post-money.

Generic office building, illustrating business funding and planning

Image: Side of office building by Alanthebox; CC0 1.0. Unmodified, illustrative photograph.

Start with the basic arithmetic

For a simple primary ordinary-equity issue, post-money value equals pre-money value plus the new investment. The investor’s percentage is new investment divided by post-money value. These simplified relationships assume no other securities, fees, secondary sale or simultaneous dilution.

If ₹100 crore is pre-money and an investor adds ₹20 crore, post-money is ₹120 crore and the new investor owns approximately 16.67%.

If ₹100 crore is post-money after a ₹20 crore investment, pre-money is ₹80 crore and the investor owns 20%.

Those are illustrative calculations, not opinions about the value of any business.

Ask what sits in the denominator

Outstanding options, warrants and convertible securities can change the fully diluted share count. So can a requirement to create an employee-option pool before completion. Ask whether the pool is included in the quoted pre-money value and who bears that dilution.

Imagine founders own all current shares, but the investor requires a 10% post-closing option pool in addition to its 20% holding. The founders cannot assume they retain 80%. The exact result depends on the agreed share mechanics and must be calculated explicitly.

Separate new money from a founder sale

In a primary issue, the company receives the subscription. In a secondary sale, an existing shareholder receives the purchase price. A mixed transaction needs separate lines; total cheque size does not equal cash available for expansion.

Put the calculation beside the term sheet

Show current securities, proposed new shares, options and conversions, then calculate each holder’s final percentage. Add a scenario for the next round. For preference instruments, model economic rights separately from the percentage.

Ask both sides to approve the same capitalisation table before definitive documents are prepared. Where foreign investment is involved, have the pricing and instrument reviewed under the applicable FEMA framework.

The useful negotiation is about an explicit share count and economic bargain. A large headline valuation is not helpful if each side has understood a different denominator.

Connect with Monei Matters

Contact Monei Matters to discuss a clear valuation and dilution presentation for your equity raise.

Monei Matters
B-9, Near City Centre Market, Ramprastha, Ghaziabad, Uttar Pradesh 201011
Phone: +91 93138 03227 / +91 93110 03227
Website: www.moneimatters.com

Services include business finance, working capital, commercial mortgage/LAP, lease rental discounting, debt syndication, restructuring, settlements, FDI advisory and equity syndication.

Disclaimer

General information based on sources reviewed for the position as at 10 September 2026; not transaction-specific legal, tax or investment advice. Illustrations are hypothetical. Applicable law, documents and lender or investor terms govern each case; funding and settlement outcomes are not guaranteed.

Sources

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