Pre-Money / Post-Money Valuation

The pre-money valuation refers to the company’s value immediately before a financing round; the post-money valuation is the value including the newly raised capital. The distinction is decisive for calculating investors’ shareholding quotas and the dilution of existing shareholders.

Also frequently relevant in practice is the ‘option pool shuffle’: if a new or enlarged ESOP/VSOP pool is factored into the valuation on a pre-money basis, its dilutive effect is borne solely by the existing shareholders.