What is a pre-money valuation?

The pre-money valuation is what a company is agreed to be worth immediately before new investment money comes in. Add the new money and you get the post-money valuation: a $16M pre-money with a $4M round is a $20M post-money, and the new investors own 20%.

Founders negotiate price in pre-money terms, but ownership math is cleanest in post-money terms — which is why the post-money SAFE became standard. When reading a headline valuation, check which convention it uses; the difference is exactly the size of the round.