Pre-Money Valuation
The value of your startup before receiving new investment.
Definition
Pre-money valuation is what your company is worth immediately before a funding round. Post-money valuation = pre-money + investment amount. The investor's ownership percentage = investment / post-money valuation. Pre-money valuations at seed stage are typically $3M-$15M, depending on market, traction, and team. At pre-revenue, valuations are driven by team quality, market size, and comparable deals.
Why it matters for founders
Pre-money valuation directly determines how much equity you give away. A $500K raise at $2M pre-money costs you 20%. The same $500K at $5M pre-money costs you only 9%. Getting the valuation right is one of the highest-stakes negotiations in a founder's journey.
Example
An investor offers $1M at a $4M pre-money valuation. Post-money = $5M. The investor gets 20% ($1M / $5M). If the founder had negotiated a $6M pre-money, the investor would only get 14.3% ($1M / $7M).
How Foundra helps
Foundra's validation deliverables (traction data, market analysis, competitive positioning) strengthen your negotiating position for higher pre-money valuations.
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Related terms
Equity Dilution
The reduction in a founder's ownership percentage when new shares are issued to investors.
Seed Round
The first significant round of venture funding, typically $500K-$5M.
Pitch Deck
A presentation (usually 10-15 slides) that tells your startup story to potential investors.
Angel Investor
An individual who invests their own money in startups, usually at the earliest stages.