Valuation Calculator Shark Tank
Calculate company valuations using Shark Tank deal math to understand investment offers and equity.
How the Valuation Calculator Shark Tank works
Calculate implied valuations from investment and equity offers, compare entrepreneur and investor perspectives, and understand deal structures.
Shark Tank valuation math is simple but critical: investment amount divided by equity percentage equals company valuation.
How it works
Tutorial
Shark Tank negotiations move fast, with entrepreneurs and investors calculating valuations instantly. Understanding the math from both sides-what the entrepreneur is implying and what the Sharks are offering-is essential for investment negotiations. The simple formula (investment ÷ equity = valuation) helps you evaluate any deal quickly.
Use the calculator above to analyze Shark Tank deals from either perspective, or follow the steps below to master valuation calculations yourself.
The Formula
| Calculation | Formula |
|---|---|
| Implied Valuation | Investment Amount ÷ Equity Percentage |
| Equity Percentage | Investment Amount ÷ Company Valuation |
| Pre-Money Valuation | Post-Money Valuation – Investment |
| Ownership Percentage | Investment ÷ Post-Money Valuation |
Step-by-Step Calculation
Let’s work through a Shark Tank scenario from both sides.
Step 1: Calculate Entrepreneur’s Implied Valuation
Entrepreneur seeks $500,000 for 10% equity:
| Component | Value |
|---|---|
| Investment Requested | $500,000 |
| Equity Offered | 10% |
| Implied Valuation | $5,000,000 |
Calculation:$500,000 ÷ 0.10 =$5,000,000
Step 2: Understand Pre-Money vs Post-Money
Clarify valuation type:
| Valuation Type | Calculation | Amount |
|---|---|---|
| Post-Money (Shark Tank standard) | $500K ÷ 0.10 | $5,000,000 |
| Pre-Money | $5,000,000 – $500,000 | $4,500,000 |
| Entrepreneur Retains | 100% – 10% | 90% |
Reasoning:Shark Tank uses post-money valuation. The company is valued at $5M after the investment.
Step 3: Analyze Shark’s Counter-Offer
Mark Cuban offers $500,000 for 25% equity:
| Component | Value |
|---|---|
| Investment Offered | $500,000 |
| Equity Requested | 25% |
| Cuban’s Valuation | $2,000,000 |
Calculation:$500,000 ÷ 0.25 =$2,000,000
Step 4: Calculate Valuation Gap
Determine how far apart the parties are:
| Party | Valuation |
|---|---|
| Entrepreneur’s Ask | $5,000,000 |
| Cuban’s Offer | $2,000,000 |
| Difference | $3,000,000 |
| Cuban Values At | 40% of Ask |
Calculation:$5,000,000 – $2,000,000 = $3,000,000; $2,000,000 ÷ $5,000,000 =0.40 = 40%
Step 5: Explore Middle Ground
Calculate potential compromise scenarios:
| Scenario | Investment | Equity | Valuation |
|---|---|---|---|
| Original Ask | $500K | 10% | $5.0M |
| Option 1 | $500K | 15% | $3.33M |
| Middle Ground | $500K | 20% | $2.50M |
| Cuban’s Offer | $500K | 25% | $2.0M |
Calculation for middle:$500,000 ÷ 0.20 =$2,500,000
Step 6: Calculate Final Ownership Stakes
If they agree at 20% for $500K:
| Party | Ownership | Value at $2.5M |
|---|---|---|
| Entrepreneur | 80% | $2,000,000 |
| Mark Cuban | 20% | $500,000 |
| Total | 100% | $2,500,000 |
Calculation:$2,500,000 × 0.80 = $2,000,000; $2,500,000 × 0.20 = $500,000
Step 7: Evaluate Dilution Impact
Compare entrepreneur’s position across scenarios:
| Scenario | Entrepreneur Keeps | Value If Exit at $10M |
|---|---|---|
| Original Ask (10%) | 90% | $9,000,000 |
| Compromise (20%) | 80% | $8,000,000 |
| Cuban’s Offer (25%) | 75% | $7,500,000 |
| Difference (Ask vs Compromise) | 10% | $1,000,000 |
Calculation:$10M × 0.90 = $9M; $10M × 0.80 = $8M; $10M × 0.75 = $7.5M; $9M – $8M =$1M difference
Final Answer:At the compromise valuation of$2.5M, the entrepreneur gives20% equityfor$500K, retaining an80% stake worth $2M
What This Means
Valuation negotiation is about finding a number both sides believe the company is worth. Giving up 20% instead of 10% means giving away twice as much of your company. That extra 10% could be worth $1 million or more at exit, which is why the percentages matter so much.
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