Pre-Money Valuation 

A Pre-Money Valuation is the estimated market value of a company immediately before it receives new external funding. It reflects the worth of the business based on current operations, assets, market potential, and financial performance, excluding the impact of the new capital. 

Formula: 

 Pre-Money Valuation = Post-Money Valuation - New Investment 

This valuation is a critical figure in fundraising discussions as it directly influences: 

• The percentage of ownership new investors will acquire. 

• The dilution existing shareholders will experience. 

• Negotiations on equity pricing. 

Investors often assess pre-money valuation using revenue multiples, market comparables, or discounted cash flow (DCF) analysis.