Pre-money valuation
In accounting, pre-money valuation means what a company is priced at immediately before new money comes in. Pre-money ÷ pre-money fully diluted shares is the round's price per share — so whatever the term sheet puts in the pre-money (converting SAFEs, a bigger option pool) is paid for by the existing holders.
Authority: YC SAFE User Guide (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- Cap tableThe cap table explainedWho owns what, counted two ways: common and preferred, the option pool, SAFEs as converted, and pre-money versus post-money — Northwind's table before its Seed.9 min
- Cap tableWays to raise: SAFEs, notes, priced rounds, debt and grants › The priced roundPreferred stock at a price per share, on the NVCA documents: Northwind's planned Series Seed.5 min
- Cap tableSAFE conversion and dilution, worked end to end › The option pool shuffleWhy a 10% pool sized post-money but created pre-money turns a $8,000,000 pre-money into $7,000,000.5 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- valuation alone
- post-money
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
Also in Equity & financing
Defined in Lexicon. This page is generated from that document, so the two can't disagree.