# Valuation

Concept · [Fundraising and equity](https://ecosystem.samcarlton.com/fundraising)

Also called: pre-money valuation, post-money valuation, pre-money, post-money, premoney, postmoney, company valuation

What the company is agreed to be worth for the purpose of an investment. Pre-money is the value before the new money goes in. Post-money is the value right after: pre-money plus the new money.

**For example:** An investor puts 1 million dollars into a company at a 4 million dollar pre-money valuation. Post-money is 5 million dollars, and the investor owns one fifth of the company.

## Connects to (9)

- [Equity](https://ecosystem.samcarlton.com/equity): Ownership in a company.
- [Dilution](https://ecosystem.samcarlton.com/dilution): When the company creates new shares, each existing owner's percentage gets smaller, even though the number of shares they hold stays the…
- [Term sheet](https://ecosystem.samcarlton.com/term-sheet): A short document that lays out the main terms of a proposed investment, such as the amount, the valuation and the investor's rights.
- [Series A](https://ecosystem.samcarlton.com/series-a): Usually the first larger funding round led by a venture capital firm, where investors buy shares at a set price.
- [Valuation cap](https://ecosystem.samcarlton.com/valuation-cap): A term in a SAFE or convertible note that sets the highest valuation used to work out how many shares the investor gets when it converts.
- [Exit](https://ecosystem.samcarlton.com/exit): The moment when founders and investors can turn their shares into cash.
- [Priced round](https://ecosystem.samcarlton.com/priced-round): A fundraising round where investors buy shares at a set price per share, which fixes the valuation of the company.
- [409A valuation](https://ecosystem.samcarlton.com/409a-valuation): An independent appraisal of what one share of a private company's common stock is worth.
- [EBITDA](https://ecosystem.samcarlton.com/ebitda): Earnings before interest, taxes, depreciation and amortization.

> This glossary is plain-language orientation, not legal or financial advice. Before you decide on a company structure, a contract, taxes or a fundraising deal, talk with a lawyer or an accountant.

Map view: https://ecosystem.samcarlton.com/valuation