Pre-Money Valuation
Private Equity glossary · Private Equity Fundamentals
Definition
Company valuation before a financing round.
Pre-Money Valuation in plain English
Pre-money valuation is simply what investors agree a company is worth *before* they hand over their new cash. Picture a lemonade stand valued at $8,000; an investor then puts in $2,000 for fresh supplies. The $8,000 is the pre-money value, and after the money lands the company is worth $10,000 (the 'post-money'). It matters because it decides how big a slice the new investor gets: on a $10,000 post-money company, their $2,000 buys 20% — so a higher pre-money means the founders keep more of the pie.
Learn these first
Practice Pre-Money Valuation
Related Private Equity terms
Private Equity practice questions · Private Equity flashcards · Private Equity study guide