Definition
Post-Money Valuation
Post-money valuation is a startup's value immediately after a funding round, equal to the pre-money valuation plus the new money raised.
Post-money valuation = pre-money valuation + new investment. It determines the new investor's ownership percentage (their cheque divided by the post-money). It is also the starting point for valuing the company at the next round.
Founders and investors care about the post-money because it sets the new ownership split and influences expectations for future rounds. Instruments like SAFEs can be written on either a pre-money or post-money basis, which materially changes who bears dilution.
Related terms
- DilutionDilution is the reduction in existing shareholders' percentage ownership when a company issues new shares.
- SAFE NoteA SAFE (Simple Agreement for Future Equity) is an instrument by which an investor gives a startup money now in exchange for equity in a future priced round.
- Pre-Money ValuationPre-money valuation is what a startup is judged to be worth immediately before a new round of investment is added to its balance sheet.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.