Explaination: Pre-money valuation refers to the value of the Start-up prior to the funding to be raised by the Start-up.
Post-money valuation on the other hand refers to the valuation of the Start-up post the raising of Funds by the Start-up.
How it applies to Startup/Investor and its impact: The difference between the Pre-money valuation and Post-money valuation is that it gives the clear picture w.r.t the number of shares that the existing and the incoming investors will be holding after the transaction is completed.
Knowing Pre-money valuation helps the Start-ups in determining the Price per share.
Price per share= Pre-money Valuation/ Total No. of Outstanding Shares.