Negotiating on pre-money or post-money

Mock term sheet negotiations with Brex Startup Ambassadors.

Author

Michael Morgenstern
January 28, 2025

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

  • Brex Supper Club in Miami 1/28

    Designed for Limited Partners investing in VC funds

    Apply Here Brex Host: Michael Morgenstern

  • Scaling Finance in the World of AI

    Designed as a mixer for founders and finance leaders to discuss scaling finance in a rapidly evolving AI industry

    Apply Here Brex Host: Jason Mok

  • Brex Supper Club w/ GoldHouse in LA 1/29

    Designed as a Lunar New Year celebration for founders and investors.

    Apply Here Brex Host: Jonathan Chang

  • Brex Supper Club AgeTech Edition in NYC 1/29

    Designed as a conversational dinner for AgeTech founders.

    Apply Here Brex Host: Erica Wenger

  • Brex Workshop: Fundraising and the VC market in Miami 1/30

    Designed as a fundraising workshop for pre-seed and seed stage founders.

    Apply Here Brex Host: Michael Morgenstern

  • Galentine’s Vino & Visionaries in NYC 2/5

    Designed a social mixer for female founders and investors.

    Apply Here Brex Host: Erica Wenger

  • Brexfast Club in Miami 2/10

    Designed as breakfast and a workshop for pre-seed and seed stage founders.
    Apply Here Brex Host: Michael Morgenstern

  • Brex Supper Club in NYC 2/11

    Designed as a conversational dinner for Brex clients in the fintech space.

    Apply Here Brex Host: Phil Chen

  • Brex Supper Club in NYC 2/12

    Designed for women-only General Partners (fund 3+)

    Apply Here Brex Host: Erica Wenger

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.

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.

 

The financial stack you can bank on. Trusted by 1 in 3 US startups, Brex allows you to manage your spend from MVP to IPO. Interested? Sign up here using the referral code NEWSLETTER and get 25,000 bonus points, $5K AWS credits, $2.5K OpenAI credits and up to $150K in SaaS discounts.

Don’t hesitate to reach out,🦾!