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.
Post-money
The valuation of a company immediately after it receives a new round of investment.
| 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 |