Valuation

The agreed price of the whole company, used to work out what percentage an investment buys.

Example

Raising $1M at a $4M pre-money valuation puts post-money at $5M, so the investor owns 20%.

Early-stage valuation is a negotiation, not a calculation. A high valuation you cannot grow into makes your next round harder, not easier.

Pre-money valuation — What the company is agreed to be worth immediately BEFORE the new investment lands.
Post-money valuation — Pre-money plus the new money. The value of the company immediately after the round closes.
Dilution — When new shares are issued, existing shareholders own a smaller percentage of the company than before.
Down round — Raising at a lower valuation than your previous round.

What investment banks actually do — Advanced, and mostly not relevant to you yet. What they are, and the one situation where a first-time founder might meet one. (10 min)
Why companies acquire startups — Advanced. Understanding the buyer's motive tells you what your company is worth to them, and to whom. (12 min)
Valuation, pre-money and post-money — The most confused pair of words in fundraising, and the arithmetic that decides what you own afterwards. (12 min)
The words everyone assumes you know — Founder vs CEO, shareholder vs employee, customer vs user, revenue vs profit, valuation vs cash, equity vs salary. Twenty minutes here saves a lot of nodding along in meetings. (15 min)