Funding & Investment
Valuation
Also Known As
Company ValuationStartup Worth
Valuation is the estimated worth of a company at a given point in time. Pre-money valuation is the company's value before new investment; post-money is the value after including the new investment.
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
- Comparables: Similar company valuations
- Multiples: Revenue or ARR multiples
- DCF: Discounted future cash flows (rare early)
- 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
Example Usage
“The company raised at a $15M pre-money valuation, giving up 25% for a $5M investment.”