"Say for example your company currently has 1,000,000 shares outstanding. You and the investors settle on a valuation of $1 per share for a pre-money valuation of $1,000,000. The investors put in $250,000 and in exchange they are issued 250,000 shares. The post money valuation of the company is $1,250,000 and investors own 20% of the company."<p>I have trouble understanding this. Why do they only own 20% of the company, if they own 25% of the shares?<p>I guess it is also a complication that the investment actually changes the value of the company (because it now has 250000$ more)? But wouldn't it make more sense to conclude that if an $250000 investment buys you 25% of the company, it is evaluated at 750000$ (before the investment)?<p>Sorry if I get this completely wrong, I am not used to those calculations.