Valuation
What is Pre-money Valuation?
The value of a company BEFORE the new round's investment goes in - sets the price per share for the new investor.
Pre-money valuation is the negotiated value of the company immediately before a priced round closes. New investor ownership = amount raised ÷ post-money (where post-money = pre-money + raise). Higher pre-money = less dilution for founders. Most pre-money valuations in venture rounds are set by lead investor competitive process; some are anchored to a SAFE/note cap that's already been set.
Example
- $5M raised at $20M pre = $25M post. New investor owns 20%. If pre had been $30M, new investor would own only 14%.