💼 Fundraising
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Pre-money Valuation
Your company's value before new investment capital is added.
Definition
Pre-money valuation is the value of a company immediately before a round of investment. Post-money valuation equals pre-money plus the new investment. These two numbers determine the investor's ownership percentage: investor ownership = investment ÷ post-money valuation. For SAFEs and convertible notes with valuation caps, the cap represents the effective pre-money valuation at which the instrument converts.
Example
If pre-money is $8M and you raise $2M, the post-money valuation is $10M and investors own 20%.