Total company value after a funding round
Post-money valuation equals pre-money valuation plus the amount of new money invested in the round. It represents the company's agreed value immediately after the round closes, and it becomes the starting reference point, alongside the new fully diluted share count, for measuring dilution in any future round.
Ownership calculations after a two million raise
Using the same numbers as the pre-money example: an 8,000,000 pre-money valuation plus a 2,000,000 investment gives a 10,000,000 post-money valuation. The investor's ownership percentage is the investment divided by the post-money valuation, so 2,000,000 divided by 10,000,000 equals 20%. This should match the share based calculation of new shares issued divided by total post-round shares using the same price per share, and if it does not, something in the cap table has been miscounted.
Post-money SAFEs and convertible notes
Some convertible instruments, notably the post-money SAFE popularised in the US and now used in some European deals, are structured so the investor's percentage is fixed against the post-money valuation directly, rather than depending on how many other SAFEs or notes also convert at the same time. This makes dilution more predictable for that investor but can increase dilution after funding for founders if several post-money SAFEs stack up before a priced round.
Read convertible instrument terms carefully, since pre-money and post-money SAFEs calculate investor ownership differently, with materially different dilution outcomes for founders.
Questions on what post-money actually fixes
- Is post-money valuation the same as the company's true value?
- It reflects the agreed price for this specific transaction, not necessarily an independently verified market value, since private company shares do not trade on an open market.
- Why does post-money valuation matter for founders?
- It sets the reference point for calculating dilution and pricing in the next round, and a very high post-money valuation can make it harder to raise a future round at an even higher price, a risk known as a down round.
- How do multiple SAFEs affect post-money valuation at conversion?
- Multiple SAFEs converting together can significantly dilute founders beyond what any single SAFE's terms suggested alone, so modelling them together before a priced round is important.
General information for founders, not legal or tax advice. Thresholds and rates change, so confirm the current position with an adviser in the relevant country before granting.