Pre-money valuation (PMV) refers to a company’s estimated valuation prior to outside investment. Any time a company seeks to sell securities to raise funds for their business, they must determine the company’s PMV. PMV determines how much ownership existing shareholders will give investors in exchange for funding.
There is no single most accurate method to calculate PMV. Oftentimes, VCs and entrepreneurs will use multiple methods to get a full picture. Check out our blog on this topic to learn more about different methods for calculating PMV.