Free calculator · Venture & Startup Finance
Note Conversion, Pre-Money vs Post-Money Method
Calculates how a convertible note converts under the fixed pre-money versus fixed post-money methods, and the founder ownership gap the choice of method creates. Inputs are founder shares, the pre-money valuation, round size, note principal, interest rate and years outstanding, and the conversion discount.
By Devon Coombs, CPA, MBA · Teaching Professor of Finance, Santa Clara University · Reviewed August 2026
From the author: Devon Coombs, CPA, MBA teaches finance at Santa Clara University and works with corporate teams on practical AI.
AI training for finance teams · Consulting · The 10 Laws of Finance
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Note Conversion, Pre-Money vs Post-Money Method
Fixed pre-money · founders keep
67.0%
price $1.125 · note at $0.844
Fixed post-money · founders keep
63.0%
price $0.945 · note at $0.709
Note balance
$1.08M
principal × (1 + r × yrs)
Fully diluted (pre / post)
11,946,667 / 12,698,413
shares under each method
Ownership gap
4.0 pts
same headline valuation
The same headline valuation, two founder outcomes, the post-money method drops the share price to fit the converting note inside the valuation, so the founders absorb the difference. The label alone never tells you who bears the dilution: build the pro forma cap table for the specific term sheet.
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This calculator comes from the free Entrepreneurial Finance course, where the concept is taught with readings, worked examples, and practice questions.
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Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.