Knowing the difference between pre-money and post-money valuation is super important for founders because it affects how much of their company they get to keep after raising money.
It helps them understand how much control they’ll have as they bring in investors and grow the business.
- Pre-money valuation is simply how much a startup is worth before any new investment comes in.
It reflects the company’s value based on things like how big the market is, how strong the team is, and how much progress the business has made.
- Post-money valuation is what the company is worth after new funding is added.
It’s just the pre-money value plus the amount of new investment.
These terms matter because they affect how much ownership everyone gets.
For more essential terms, check out our startup funding glossary.
For founders, a higher pre-money valuation means they can raise money while keeping more of the company.
For investors, the post-money valuation shows them what percentage of the business they now own.
This balance impacts control, decision-making, and potential future profits for both sides.