Valuation
Also known as: Pre-Money Valuation, Post-Money Valuation, Company Valuation
The estimated worth of a company at a given point in time, used to determine the price of equity in a financing round.
Full Definition
Pre-money valuation is the company's value before new investment. Post-money valuation is pre-money plus the new investment. Valuation determines how much equity investors receive for their investment. Healthcare startups are typically valued based on comparable transactions, revenue multiples (for later-stage companies), and milestone-based assessments of risk-adjusted potential. Early-stage healthcare companies are valued primarily on team, technology, and regulatory/market opportunity.
Example
A company raising $5M at a $15M pre-money valuation gives investors $5M / $20M post-money = 25% of the company. A company raising the same $5M at a $25M pre-money valuation gives investors 16.7% — the higher valuation reflects lower dilution for founders.