Simple Cap Table Analysis

When making a venture capital or growth equity investment, perhaps the most critical priority is confirming that your pro-forma ownership percentage of the target company aligns with your investment expectations – in short, that you are getting what you paid for. While cap table analysis can seem confusing at first glance, you can in most instances quickly confirm the outcome lines up with your assumptions using a simple calculation:

1. Start with the implied valuation of the company as of immediately prior to the investment (the "PreMoney Valuation").
2. Add the total amount of the equity financing (your investment, together with the total amount of money expected to be raised from other investors) to the Pre-Money Valuation (this sum is the "Post-Money Valuation").