What's the difference between the two and when they just say valuation which one are they talking about?

asked Jan 26 '10 at 19:10

Samir%202's gravatar image

Samir 2
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edited Feb 01 '10 at 20:41


In simple words:

  • Pre-money: the value of your company before any outside investment. Example: USD 100,000.
  • Post-money: the value of your company after an investment. Example: if someone invests USD 25,000 he'll own 20% of your company as the post-money valuation will be USD 125,000.
  • So the equation is: pre-money + investment amount = post-money valuation

In my experience when they speak of valuation they usually talk about the pre-money valuation as that's how they figure out what percentage of the company they will own if they invest an amount x.

answered Jan 27 '10 at 00:12

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question asked: Jan 26 '10 at 19:10

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