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Entrepreneurship & Startups vocabulary · Equity & Valuation

Valuation

Meaning in entrepreneurship & startups, with examples

/ˌvæljuˈeɪʃn/nounCore term

In entrepreneurship & startups, valuation means: The estimated value of a company, agreed between founders and investors in a funding round, which decides how much ownership investors get for their money.

In Turkish: değerleme, şirket değeri

How it is used

Central to every negotiation. Investors and founders discuss, set, raise or cut the valuation. Early-stage valuations depend more on the team, the market and traction than on profits. People distinguish pre-money and post-money valuation.

Example sentences

  1. The investors offered 2 million dollars at an 8 million valuation.

  2. A very high valuation now can make the next round harder if growth slows.

Common collocations

  • at a valuation of
  • set the valuation
  • valuation cap
  • high valuation
  • negotiate the valuation
  • pre-money valuationThe value of a company just before new investment money comes in. It is used to work out the price per share in a funding round.
  • post-money valuationThe value of a company right after a funding round: the pre-money valuation plus the new money invested.
  • equityOwnership in a company, divided into shares. In startups, equity is what founders, employees and investors hold, and its value grows if the company succeeds.
  • down roundA funding round in which a company is valued lower than in its previous round, so new shares are sold at a lower price than before.
  • unicornA privately owned startup valued at one billion US dollars or more, a level that was very rare when the term became popular in 2013.

This word in other fields

The same English word can have a different meaning in another field:

More terms: Equity & Valuation

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