Explainer
Valuation
What a company is worth
The price tag placed on an entire company, usually set in a funding round.
A valuation is the total value assigned to a company. In a private funding round, it is agreed between the company and its new investors. It is not set by a public market, so it can be harder to verify.
Two terms matter. Pre-money valuation is the value before new money comes in. Post-money valuation is the pre-money value plus the cash invested. The post-money figure is what most headlines quote.
A high valuation is not the same as a profitable company. It reflects what investors are willing to pay for expected future growth.
Illustrative explainers. Figures in examples are hypothetical.