There are 2 ways present our Valuation to investors:

Pre-Money Valuation. $500k is 25% of $2m. That’s the value of $500k before money is invested, or “Pre-Money”.

Post-Money Valuation. Values the company after the money is invested (Post Money). So the math is a little different. We take the $2m Valuation + $500k Raise Amount and add them together to get $2.5m. Then the $500k invested is a % of that, which is 20% (vs. 25%).

You can choose either method, just make sure you let investors know which one you are referring to so you’re both doing the same math!