Pre-money valuation

Pre-money valuation

Pre-money valuation refers to the value of a company not including external funding or the latest round of funding. Pre-money is best described as how much a startup might be worth before it begins to receive any investments into the company. This valuation doesn’t just give investors an idea of the current value of the business, but it also provides the value of each issued share.
In this case, if we consider proposed $8M as a pre-money valuation, then upon $2M investment, the investor will get 20% of target company shares.