Pre-money vs Post-money Valuation
Pre-money valuation is what a company is worth before new investment comes in, post-money is what it is worth immediately after. The difference determines exactly how much ownership the new investor receives.
Pre-money
The valuation of a company before it receives a new round of investment. It is the agreed value before new capital arrives, and it determines the price per share.
Post-money
The valuation of a company immediately after it receives a new round of investment. It equals pre-money value plus new capital, reflecting total capitalization post-funding.
Agreed valuation before the round
Pre-money valuation plus amount invested
The starting negotiation point
The investor's exact ownership percentage
Confusing it with post-money when negotiating
Not realizing it already includes the new cash raised
| Formula | Agreed valuation before the round | Pre-money valuation plus amount invested |
|---|---|---|
| Used to calculate | The starting negotiation point | The investor's exact ownership percentage |
| Common founder mistake | Confusing it with post-money when negotiating | Not realizing it already includes the new cash raised |