PRE-MONEY AND POST-MONEY STARTUP VALUATION

Accelerate your company with these expert tips "Pre-money and post-money valuation of a startup". Analyse and discover this TIP!

Pre-money

1. The assessment pre-money is the value that the founders assign to their company when they start looking for a round of financing (which will materialise through a capital increase (see+)). In other words, it is the valuation of the company before the money was received.
2. The pre-money value of a startup refers to the value of the company before receiving investment from a business angel or other investor. It is a measure of the value of the company at a given point in time, and is used as a basis for calculating the post-money value of the company after receiving investment. 
3. Pre-money value is determined on the basis of various factors, such as growth potential, market position, equipment, intellectual property, etc. Pre-money valuation is an important factor in the negotiation of the investment, as it affects shareholding and dilution of existing shareholders. The pre-money valuation is an important factor in the negotiation of the investment, as it affects the shareholding and the dilution of existing shareholders (see TIP How much is my company worth).

Post-money

1. The assessment post-money is the valuation of the company immediately after the capital increase has materialised, and is calculated by adding the investment obtained to the pre-money valuation. 
2. The post-money value of a startup refers to the total value of the company after it has received an investment. In other words, it is the value of the company after new investors have contributed their capital. This value is calculated by adding the pre-money value of the company (value before the investment) and the total amount of the investment received.

For example:

Imagine a company that has a pre-money valuation of €1m. If it manages to close a funding round of €250,000, its post-money valuation will be €1.25m.

Once this round has been closed, the post-money value of the company is used to calculate with a simple mathematical operation what percentage we would have: "If we have invested €250,000 at a pre-money valuation of €1M, we will have €250,000 / 1,250,000 = 20 % of the company".