Why is the post money valuation at time one (1) equal to the discounted second round pre-money (PRE2). Can someone explain this logic to me?
A post money valuation at time one is the present value of the TOTAL exit price. So this means that PRE2 is equal to the exit price? I don’t understand how this is because the PRE money valuation is netted while the exit price is the total exit value.
I need your help Magician
POST1 is discouned PRE2 which is the value of the VC firm from the perspective of first round investor for his time horizon and investment in the VC whereas POST2 is discounted final exit value of the VC for the second round investor contributing to expand the size of VC.
Hello doobsmeister,
I suppose you’ve got a mistake with the point in time of post-money of 1st round. In the formula: POST1 = Discounted of PRE2 POST1 is the post-money value of firm at time 0 in 1st round. PRE2 is the pre-money value of firm at the end of 1st round and the beginning of 2nd round. So, your understanding that POST1 at time 1 is equal to PRE2 at time 1 is correct. Hope it helpful to you.