pre-money valuation

Definition

What investors claim your company is worth before they invest—a number that's actually meaningless but gets thrown around in press releases. Add the investment amount to get post-money, which is what your ownership percentage is actually based on.

Example Usage

We raised $5M at a $20M pre-money valuation, and somehow I still don't understand why my ownership percentage went down.

Origin

Venture capital valuation terminology, standard since emergence of VC industry

Fun Fact

The shift from pre-money to post-money SAFE notes in 2018 made Y Combinator startups slightly less confusing but sparked endless Twitter debates about founder dilution.

Source: Venture capital investment and valuation methodology

Related Terms

Intermediate

Hockey Stick

A growth chart that shows flat revenue followed by a sudden exponential spike, resembling a hockey stick if you squint and ignore the part where most startups never reach the blade. It's the most fictional graph in pitch decks since the invention of PowerPoint.

🚀 Startup / VC

Beginner

niche-down

The process of narrowing your target market to a smaller, more specific segment rather than trying to serve everyone. What pivoting looks like when you finally accept your TAM assumptions were delusional.

🚀 Startup / VC

Advanced

pay-to-play

A provision requiring existing investors to participate in future funding rounds or lose their special privileges. The venture capital equivalent of 'use it or lose it.'

🚀 Startup / VC

Intermediate

take rate

The percentage of transaction value a platform extracts as revenue, revealing how much you're actually taxing your users for the privilege of using your service. Too high and users revolt; too low and investors revolt.

🚀 Startup / VC

Advanced

vulture capital

Investors who prey on distressed startups, offering unfavorable terms when founders are desperate. They prefer the smell of burning runway in the morning.

🚀 Startup / VC

Beginner

founder dilution

The reduction in founders' ownership percentage that occurs each time the company raises money or issues new equity. It's the slow, inevitable erosion of ownership that founders signed up for when they took outside capital.

🚀 Startup / VC

Translate This Term

See “pre-money valuation” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on X Share on Facebook Share on LinkedIn

Discover a Term

Beginner

doctorate

The terminal academic degree that requires years of research, comprehensive exams, and a dissertation that approximately...