What Is Valuation?
Whenever you talk about a startup, the conversation at some point always seems to turn to valuation. The pre-money valuation is the value of the company’s equity prior to the investment and the post-money valuations if the value of the company’s equity after the investment. Investors use various methods to determine the worth of a company and the price they are willing to pay for their investment. These can range from the discounted cash flow approach - whereby the value of a company is based on expectations about how much money the company will make in the future - to a (more arbitrary) number based on a desire to own a predetermined percentage of the company in return for the anticipated level of funding needed to achieve a certain milestone.