Valuation

A valuation represents how much a company is worth. It is generally expressed either as Pre-Money Valuation or Post-Money Valuation.

Pre-Money valuation refers to the value of the company excluding funding. It represents how much a startup is worth before receiving investments.

Post-Money valuation refers to how much the company is worth after receiving investments.

An example:

  • Startup is worth $1M and investor invests $250K
  • If an investor invests $250K on $1M Pre-Money, they own 20% of the company.
  • If an investor invests $250K on $1M Post-Money, they own 25% of the company.

 

  Pre Money    Ownership %      Post Money   Ownership %
Founders      $1,000,000    80%      $1,000,000    75%
Investor $250,000 20%      $250,000    25%
Total $1,250,000      $1,000,000     
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