Definitions: Pre-money & Post-Money
In VC there tends to be lots of jargon and it can certainly exacerbate confusion for anyone attempting to learn about the process of raising capital. One set of the terms that I wasn't sure of when I first started thinking about venture capital were the "pre-money" and "post-money" valuations. However, both of these terms are pretty easy to understand with a simple explanation.
Pre-money refers to the value of the company prior to raising capital and the post-money refers to the value of the company after raising capital. For example, if a company has a $3M pre-money valuation and it raises a $2M round, the post-money valuation is $5M. Share ownership is calculated based on the post-money valuation, thus, in the previous example, $2M raised off of a $5M post-money valuation would buy 40% of company.