Investors such as venture capitalists and angel investors use pre-money valuations to determine the amount of equity they need to secure in exchange for any capital injection. For example, assume a company has a $100 million pre-money valuation. A venture capitalist puts $25 million into the company, creating a post-money valuation of $125 million (the $100 million pre-money valuation plus the investor's $25 million). In a very basic scenario, the investor would then have a 20% interest in the company, since $25 million is equal to one-fifth of the post-money valuation of $125 million.
Investment dictionary. Academic. 2012.
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Post-money valuation — is the value of the company after the investment has been made. This value is equal to the sum of the pre money valuation and the amount of new equity. [ [http://www.markpeterdavis.com/getventure/2008/06/venture valuati.html Get Venture by Mark… … Wikipedia
post-money valuation — The value of a company after its most recent round of financing. Related: pre money valuation … Financial and business terms
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pre-money valuation — the value of a company just before its most recent round of financing. Bloomberg Financial Dictionary Related: post money valuation … Financial and business terms
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