Formula
How to Calculate Market Cap
The total market value of a company's outstanding shares, calculated as share price multiplied by total shares.
Market Capitalization
Market Cap = Share Price x Total Shares Outstanding
Where
- Share Price
- = Current price per share
- Shares Outstanding
- = Total shares issued and outstanding
What Is Market Cap?
Market capitalization represents the equity value of a company as determined by the market. For private companies, the 'market cap' is approximated by the post-money valuation from the most recent funding round, though this can be misleading due to preferential terms.
Worked Example
After the Series C at a $2B post-money valuation, the company's implied market cap was $2B. But because the Series C had 2x participating preferred, the effective value to common shareholders was significantly less.
Why Market Cap Matters
Market cap is the most commonly cited measure of company size, but in private markets, it doesn't account for liquidation preferences and other terms that affect who gets what.
Related Terms
Frequently Asked Questions
How do you calculate Market Cap?
Market Cap is calculated using the formula: Market Cap = Share Price x Total Shares Outstanding. The total market value of a company's outstanding shares, calculated as share price multiplied by total shares.
What is a good Market Cap?
What constitutes a "good" Market Cap depends on context — the fund's stage, vintage year, and strategy. Check our benchmarks and calculators for specific ranges.