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 |