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Definition of Valuation

A company's valuation is a way of stating what the company is worth. For a startup, its valuation is typically an amount that is negotiated between the startup and investors as part of a financing.

However, valuation can mean different things in different contexts. For example, a startups valuation at its latest round of financing is distinct from a 409A valuation, which is what the startup will use to set the exercise price for stock options it issues to service providers.

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