Pre-Money
Private Credit glossary · Portfolio Management, Monitoring & Workouts
Definition
Valuation of a company immediately before receiving new investment.
Pre-Money in plain English
Pre-money is what a company is judged to be worth the instant BEFORE new investors put fresh cash in. It matters because it decides how big a slice each new dollar buys: if the pre-money is $8 million and someone invests $2 million, the company is now worth $10 million and that investor owns 20% (their $2M out of $10M). Think of pricing a pizza before anyone adds toppings — agree on the base value first, then whatever a new person chips in decides how much of the pie they get. A higher pre-money means the founders keep more of the company for the same money raised.
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