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 Valuation
Pre-money valuation is the agreed value of a company just before new investment comes in. It sets the price per share and how many shares the investor receives.
Post-money Valuation
Post-money valuation is a company's value right after a funding round: the pre-money value plus the new investment. It sets each investor's percentage.
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 |