A Striking Explanation of VC Mechanics, Part 1: Basic Calculations in Financing Rounds

There are many articles out there explaining the mechanics of investment rounds. However, there are a range of founders who are still not confident enough about such VC and investment mechanics.
That’s why Iskender Dirik (MD at Microsoft Startup Growth Partners and Venture Partner at EQT Ventures), Christopher Mohrmann (Investment Associate at Bauer Venture Partners) and Peter Möllmann (Partner at Schnittker Möllmann Partners) decided to create a very striking, visual explanation of the most important mechanics via infographics.
The first infographic out of the series “A Striking Explanation of VC Mechanics” shows the fundamentals of each financing round. By showing simple numerical examples, it will be explained what a pre- and post-money evaluation is, how it can be calculated and how many shares an investor gets based on his investment.
Moreover, it will be outlined how the share price is formed during the moment of an investment round, how many new shares will be given to a new investor and how many shares are available in total after a round.
Finally, it will be considered that the total invested amount is always split into a payment into the nominal capital and a payment into the capital reserve.

Authors: Iskender Dirik (MD at Microsoft Startup Growth Partners and Venture Partner bei EQT Ventures), Christopher Mohrmann (Investment Associate at Bauer Venture Partners), Peter Möllmann (Partner at Schnittker Möllmann Partners).
