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Glossary

Pre-Money Valuation

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Related terms

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Cap Table

A cap table (capitalization table) is the spreadsheet that tracks who owns what in your company: founders, employees, investors, and option holders.

Glossarybeginner

Dilution

Dilution is the drop in your ownership percentage when a company issues new shares. It happens at every priced round and option pool top-up.

Glossarybeginner

Option Pool

An option pool is a chunk of company shares set aside for current and future employees, usually 10–20% of the company.

Glossarybeginner

Post-money valuation

Post-money valuation is the value of a company immediately after it receives a round of investment. Pre-money valuation plus the new money in.

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The pre-money valuation is what your company is worth immediately before an investment round closes. Add the new investment to get the post-money valuation:

post-money = pre-money + new investment

If you raise $1M on a $4M pre-money valuation, your post-money is $5M and the new investor owns $1M / $5M = 20% of the company.

Why it matters

Pre-money valuation directly determines how much of the company a given investment buys. Higher pre-money means less dilution for founders. It's the single most consequential number you negotiate in a priced round.

Common reference points

  • Pre-seed: $3M–$8M pre-money for solo or small teams with an MVP.
  • Seed: $8M–$20M pre-money with early traction or a strong founder profile.
  • Series A: $20M–$80M pre-money with product-market fit signals and revenue.

These bands move with the market and depend on sector. They aren't promises.