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What is the difference between pre-money and post-money valuation?
The pre-money value of a company is its intrinsic value before any new capital is contributed. Before considering a capital increase, it is obviously important that the entrepreneur and the investor agree on this pre-money value. The post-money value is simply the pre-money value plus the amount of the capital increase.
A small example. Let’s imagine that an entrepreneur is looking for 2 million euros in exchange for 25% of his capital. The post-money value would then be 8 million euros (2 million divided by 25%), and the pre-money value would then be 6 million (8 million minus 2 million).