bbtomato

both formulas are correct, but they involve different circumstances.

the first formula is for when the VC actually puts $ into the company. it is valuing what the founders/original backers own + the VC investment = post money valuation.

the second formula is sort of backing into the VC's projection of how much money they will make on the deal. it's doing a PV of their % ownership * what the company will exit at (selling or IPO).


typically the first formula is used a lot, second not so much. Usually the VC is calculating their IRR, not using the 2nd formula.