The Pre money evaluation of the company is one of the indicators for the expediency of the investment in it. The pre money evaluation is valued by the entrepreneurs, and derives from many parameters such as, the company’s profits, its physical and intellectual assets (particularly relevant to start-ups), estimate of future profits, market size and more. The pre money evaluation represents the worth of all of the company’s assets combined before receiving the investment. For example, if after receiving an investment of two million dollars, the evaluation of the company was six million dollars, the “pre money evaluation” would be equal to four million dollars. The evaluation of the company can be done using various methods, including the multiplier method, the system asset value method, the cash flow method, etc.
What is “Pre money evaluation” ?
About the Author: Yana Sheinberg
Yana is a third-year student in the joint program of Law and Government at the IDC Herzliya. In her free time, Yana enjoys sports, reading and crafting.