How the round arithmetic works
Divide the proposed cash investment by the fraction of post-round ownership purchased. A $1 million investment for 20% implies a $5 million post-money valuation. Subtract the $1 million new cash to get an implied $4 million pre-money valuation. In this simplified example, all existing holders collectively retain 80% immediately after the round. Carta explains the same distinction between pre-money and post-money values.
This is not a market appraisal
A startup does not have one objectively correct value that can be derived from two input boxes. The result expresses a proposed transaction: how much an investor would pay for a specified percentage. Different investors may use different assumptions about growth, risk, control, and future financing. A cap on a SAFE is not automatically the company's current priced-round valuation; the SEC explains that SAFEs can defer the equity calculation until a triggering event.
Model a full cap table before signing
This tool intentionally omits option-pool expansion, multiple investors, convertible notes, SAFEs, liquidation preferences, debt, secondary sales, and taxes. These can materially change the founder's fully diluted ownership and cash received on an exit. Carta's pro-forma cap-table guidance discusses why timing and option-pool size matter. Use transaction documents and qualified legal and financial advice for an actual raise. Do not infer that a high headline valuation makes a security safe or liquid.
Carta: pre-money versus post-money · SEC: common startup securities.