Q
Valuation
A
Pre-money valuation is a term widely used in private equity and venture capital, referring to the valuation of a company prior to an investment or financing. If an investment adds cash to a company, the company will have different valuations before and after the investment. The pre-money valuation refers to the company's valuation before the investment. The post-money valuation refers to the company’s valuation post-investment. For example, if a company has a pre-money valuation of $10 million and raises $2 million, the post-money valuation is $12 million. An investor who invests $2 million in that particular round of funding will measure his percentage ownership of the company as $2 million/ $12 million, or 16.67% of the company.
