## What is Valuation? Valuation determines what a company is "worth" and therefore how much equity investors receive for their capital. It's more art than science at early stages. ## Pre-Money vs Post-Money **Pre-Money:** Company value before investment **Post-Money:** Company value after investment **Formulas:** ``` Post-Money = Pre-Money + Investment Ownership % = Investment / Post-Money ``` **Example:** - Pre-money: $8M - Investment: $2M - Post-money: $10M - Investor ownership: 20% ## Valuation Methods 1. **Comparables**: Similar company valuations 2. **Multiples**: Revenue or ARR multiples 3. **DCF**: Discounted future cash flows (rare early) 4. **Negotiation**: Supply/demand dynamics ## Valuation Benchmarks (2024) | Stage | Typical Range | |-------|---------------| | Pre-seed | $2M - $6M | | Seed | $8M - $20M | | Series A | $30M - $80M | ## Studio Impact on Valuation Studio backing may increase valuations due to: - De-risked validation process - Operational support - Track record of studio - Higher confidence in execution