Negotiating on pre-money or post-money
Mock term sheet negotiations with Brex Startup Ambassadors.
Happy Tuesday Brex community,
Founders and investors often disagree on using pre-money vs. post-money valuations because, to put it simply, each approach has distinct implications for ownership and flexibility. Semantics may seem minor at first, but the nuance can lead to unexpected dilution or renegotiation headaches. A post-money valuation spells out exactly who owns what after the round closes, creating instant clarity. A pre-money valuation, meanwhile, provides some leeway if the round changes in size, but can leave founders with surprises when additional capital arrives—especially if they haven’t weighed the knock-on effects on ownership.
Consider raising at a “$60M pre-money” versus a “$60M post-money.” If you tack on $10M in funding at a $60M pre-money, you end up with a $70M post-money valuation, which means that fresh capital will slightly dilute everyone, but in ways that can be adjusted if the final amount raised shifts. At $60M post-money, however, the pre-money valuation is effectively $50M—so if you suddenly need an extra $5M, you’ll either need to renegotiate terms or absorb all that extra dilution yourself.
If you are interested in a mock negotiation session or discussing the Series A market, schedule time with me here!
Growing together, Michael Morgenstern
Bo Abrams and Gus Woythaler are the co-founders of kommu
Description:?kommu is a connected home-sharing platform that links travelers with not-for-profit primary homes and apartments through trusted networks (alumni, friend groups, and social communities). Consumers save 50% on travel costs and hosts get access to trusted guests and a new income source. Businesses can stretch their travel budget further and reward employees for staying in-network.
Ambassador's Perspective:?kommu addresses the growing gap left by short-term rental platforms. Its connection-as-a-service model complies with local ordinances and unlocks a massive offline market of primary residences whose owners or tenants can’t - or won’t - list on established platforms.
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Communitas Capital is a New York based venture capital firm founded by financial industry veterans Doug Atkin, former CEO of Instinet, Tom Glocer, former CEO of Thomson Reuters, and Duncan Niederauer, former CEO of The New York Stock Exchange. Communitas invests in early-stage businesses in financial technology and other verticals - such as real estate tech, insurance, alternative data, blockchain and digital marketplaces.
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Don’t hesitate to reach out,??!