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Venture Financing

Pre / Post-Money Valuation

What a company is worth before vs after new investment goes in

What it is

Pre-money valuation is what a company is judged to be worth right before it takes in new investment; post-money is that value plus the new cash (post-money = pre-money + amount raised). The investor's ownership equals their investment divided by the post-money valuation. So a $2M investment at an $8M pre-money ($10M post) buys 20%.

Why it matters

The pre/post distinction decides exactly how much of the company investors get. Founders who quote "valuation" without specifying which one can accidentally give away far more than they intended.

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