Deal Terms
Pre-Money Valuation
A company's valuation before a funding round closes — the negotiated price of the company excluding the new capital being raised.
Pre-money valuation is the value attributed to a company before new investment capital is added. It's the key negotiated figure in any equity financing round. Example: if a VC agrees to a $10M pre-money valuation and invests $2M, the post-money valuation is $12M and the investor owns 2/12 = 16.7%. Pre-money valuation drives everything: investor ownership percentage, option pool dilution calculations, and anti-dilution thresholds. At early stages (pre-revenue or minimal revenue), valuation is largely based on the team's perceived quality, market opportunity, and comparable deals. At later stages, valuation is more anchored to revenue multiples — a Series B SaaS company might be valued at 15-20x ARR.