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Also known as: pre-money, pre-money val

Pre-Money Valuation

ConceptualFundraisingFinance

Definition

Pre-Money Valuation: Pre-money valuation is the value of a company immediately before receiving new investment. It determines how much equity investors receive for their investment. For example, a $10M pre-money with a $2M investment results in investors owning ~16.7% ($2M / $12M post-money).

Example Usage

“With a $5M pre-money valuation, the $1M angel investment gave them 16.7% of the company.”

Common Misconceptions

Pre-money equals post-money. Post-money = pre-money + investment amount.
Pre-money is set by founders. It's negotiated based on traction, market, and investor demand.
Higher pre-money is always better. It sets expectations for future rounds and can cause down rounds.

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