Pre-money valuation

The pre-money or pre-money valuation is a term that refers to the value of the shares of a company before it receives any investments or before it goes public. The valuation is done before any angel, seed or venture fund is put into the business. This term is normally used by venture capitalists (VCs) or other investors. At this point, it is also called the pre-revenue, as the company still has yet to have some sales.

And if the company does not have any service or product to release or ready for release, the pre-money valuation would be based on other determinants. The business would be compared with other businesses at the same stage, and the assessment is made by looking into the market value of established businesses that have the same goal or operational approach.

Additionally, if the company is selling services or products that are entirely new to the market, it would be valued compared with related businesses. Other factors that can help in getting the value of the business are: the track record and experience of the leaders and founders, the competition in the market, and the viability of providing the services.

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