Also called: Pre-money, Pre money
TL;DR
The agreed-upon value of the company immediately before a new investment round closes, pre-money + new money = post-money.
Pre-money valuation is the company's value before the new investment is added. It determines what percentage of the company the new investors receive. Pre-money is the headline negotiated number, but the post-money, which includes the new round and any option-pool top-up, is what actually drives ownership math.
Founders sometimes optimize for pre-money valuation while ignoring option-pool shuffles or other dilutive maneuvers that erode their ownership without changing the headline.
Pre-Money Valuation = Post-Money Valuation − Investment Amount
A founder negotiates a $20M pre-money on a $5M raise. Post-money = $20M + $5M = $25M. Investor ownership = $5M ÷ $25M = 20%. Founder ownership before the round was 100%; after the round (without an option-pool refresh) it's 80%.
Founders rarely state pre-money valuation in the deck itself; it surfaces in 1:1 conversations with investors after pitch.
The company's value immediately after a new investment closes, equal to pre-money valuation plus the new investment amount.
The reduction in an existing shareholder's ownership percentage caused by issuing new shares in a financing or an option grant.
Equity reserved for future employee, advisor, and contractor grants, usually sized as 10 to 20% of fully diluted shares.
The maximum company valuation at which a SAFE or convertible note will convert into equity, protecting early investors from dilution at high prices.
A non-binding document outlining the principal terms of a proposed financing, used to align investor and founder before legal documents are drafted.
Long-form deep dives on the slides Pre-Money Valuation most often shows up on.
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