Tip #78: Pre-money valuation

Tip 78: Deal structure – pre-money valuation. When you describe the proportion of your company you are selling, provide the pre-money valuation. That is the valuation of the company before an investment is made.

You don’t need to show on the slide the post-money valuation (unless there is some huge complication we need to know that will mean pre-money + money ≠ post-money*). Nor do you need to show the percentage of the company that we are buying.

You should know both of these numbers. But you only need to show the pre-money valuation on your slide, because that is the metric on which we judge each company we look at. Anything else is just adding complication and/or making it hard for us to compare against other deals – which is bad for you.

(*See our workshops on deal valuation for more on this.)