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If it's a privately held company, then I think you could reasonably argue that the "pre-money" valuation is illusory. There's no market price, and the company i

If it's a privately held company, then I think you could reasonably argue that the "pre-money" valuation is illusory. There's no market price, and the company is only worth whatever investors can be convinced to pay for it. To take your example: my hypothetical 10% isn't worth $2m -- it's worth an unknown amount (one hopes more than the $100k it started at). Only after somebody is willing to pay $5m for 20% of the company can one realistically say what my (now 8.2%) shares are worth.

mason55 6y ago
Ah, in the context of this conversation "pre-money" means the value of the company before taking into account the cash raised in the current round. It doesn't mean a company that's never taken any outside investment. It's perfectly reasonable to talk about a pre-money valuation that has a market price. If you raise $20m for 20% of the company then you can say the company had a post-money valuation of $100m or a pre-money valuation of $80m, and both of those numbers are market-based. The poster I was replying to seemed to think that the act of raising money is what should increase the value of your shares, which is not the case. See here for more info on how the terms are used: https://www.investopedia.com/ask/answers/difference-between-premoney-and-postmoney/ https://www.investopedia.com/ask/answers/difference-between-...