Private Equity & VCIntermediate

Pre-money & Post-money Valuation

A start-up's value just before and just after new investment comes in.

Detailed explanation

Post-money equals pre-money plus the new money raised. The investor's stake equals investment divided by post-money.

Formula

Post-money = Pre-money + Investment; Investor stake = Investment ÷ Post-money

Example

Pre-money ₹40 cr, investment ₹10 cr → post-money ₹50 cr, investor owns 20%.

Why it matters

Every term sheet negotiation starts here.

Key points

  • Determines dilution.
  • Higher pre-money = less dilution.
  • Check option pool treatment.

Related terms

DilutionTerm Sheet

More in Private Equity & VC

Private EquityVenture CapitalSeed FundingAngel InvestorTerm SheetLiquidation Preference

Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.