Glossary
Pre-Money Valuation
Loading…
Glossary
Loading…
A cap table (capitalization table) is the spreadsheet that tracks who owns what in your company: founders, employees, investors, and option holders.
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.
An option pool is a chunk of company shares set aside for current and future employees, usually 10–20% of the company.
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.
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.
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.
These bands move with the market and depend on sector. They aren't promises.