Pre-money determines the value of the business before investment; the post-money valuation takes into account the investment. Your example isn't quite right. $

Pre-money determines the value of the business before investment; the post-money valuation takes into account the investment. Your example isn't quite right. $500k USD at 50% equity does imply a $1M pre-money valuation. However, if we're agreed that 50% of the business is worth $500k, then immediately after the investment the value of the business is 100% of the equity (which we agreed is $1M) plus new assets (we've just put $500k in). So the post-money valuation is $1.5M.