Pre & Post-Money Valuations Explained #shorts

Here's the difference between pre-money valuation and post-money valuation. I have these conversations on a daily basis with startup founders, other investors, and VCs. It's important to highlight some of the basic differences and definitions. Pre-money valuation is quite simple. It's essentially the opinion of the company's valuation before it receives any type of investment. Typically, it's the opinion of the entrepreneur or the founder, taking into account the funding rounds of competitors or other variables in the industry, and how much they think their company is worth.

Post-money valuation is very specific, a fixed number that gets assigned to a company after the investment round is completed. The pre-money valuation formula is essentially post-money valuation minus the investment amount. The post-money valuation formula involves dividing the invested amount by the percentage that the VC or the investor receives in the company.

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