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Intermediate

What is post-money valuation

Also known as: post-money, post money valuation

Definition

Post-money valuation is a company's value right after a funding round: the pre-money value plus the new investment. It sets each investor's percentage.

Why it matters

The post-money gives the investor's percentage in one division: the cheque divided by the post-money.

Common mistakes

Treating the post-money valuation as cash the company has. Only the investment itself arrives in the bank.

Related terms

Worked exampleIllustration

Comparing two offers by post-money

Illustrative numbers: a fictional clinic booking app receives two offers.

  1. Offer A

    ₪1,000,000 at a ₪4,000,000 pre-money valuation.

    ₪5,000,000 post-money

  2. Offer A

    The investor's share under offer A.

    1,000,000 ÷ 5,000,000 = 20%

  3. Offer B

    ₪2,000,000 at a ₪5,000,000 pre-money valuation.

    ₪7,000,000 post-money

  4. Offer B

    The investor's share under offer B.

    2,000,000 ÷ 7,000,000 ≈ 28.6%

  5. Reading it

    Offer B has the higher post-money, yet the founders give more of the company, because it brings more money.

    28.6% against 20%

Post-money tells you the investor's percentage. The pre-money tells you the price.

Illustration

The company after the money

Before the round: ₪4,000,000, Today's shareholders 100%. After the round: ₪5,000,000, Today's shareholders 80%, New investor 20%.⁨Before the round⁩⁨After the round⁩100%80%20%₪4,000,000₪5,000,000
  • Today's shareholders80%
  • New investor20%

₪1,000,000 ÷ ₪5,000,000 = 20%

₪4,000,000 before the money plus the ₪1,000,000 investment makes a post-money of ₪5,000,000. The investor's share is the investment divided by the post-money: 20%.

Each pie's area is the company's value. The dashed gold ring marks the post-money valuation, the pre-money plus the investment.

Definition

Post-money valuation is the value agreed for the company right after a round, equal to the pre-money valuation plus the money invested. The new investor's share is the investment divided by the post-money. It is a negotiated price, not cash in the bank, and not a market capitalisation, which is a term for listed companies. Check what the figure includes: a pool created in the round and converting SAFEs change the share count behind it.

Why it matters

It also shows that the round itself does not change the founders' paper value, because the new money buys new shares at the same price per share. Dilution is worth taking when the money makes the company grow faster than the founders' percentage shrinks.

Directly related: Equity, Dilution, Cap table.

Formula

Post-money Valuation = Pre-money Valuation + Investment Amount

Improvement tips

  • For every offer, work out the investor's share as the cheque divided by the post-money.
  • Compare offers by the pre-money, which is the price, and by how much money you need, not by the post-money alone.
  • Ask whether the post-money includes a new option pool and converting SAFEs.
  • Update the cap table on the day the round closes.

Common mistakes

  • Picking the offer with the higher post-money as if it were the better price.
  • Calling the post-money a market capitalisation, a term for listed companies.
Pre-money vs Post-money Valuation

Related terms

StartupsBeginner

Equity

Equity is ownership of a company, measured in shares and percent. On a balance sheet the same word means book equity: what the business owns minus what it owes.

StartupsIntermediate

Dilution

Dilution is the fall in existing shareholders' percentage of a company when it issues new shares. The percentage drops, while the stake's value can rise.

StartupsIntermediate

Cap table

A cap table (capitalization table) shows who owns how many shares and options in a company, and what percentage each holds on a fully diluted basis.

StartupsAdvanced

Term Sheet

A term sheet is a short, mostly non-binding document with the key terms of an investment, such as amount, valuation, control and liquidation preference.

StartupsIntermediate

Pre-money Valuation

Pre-money valuation is the agreed value of a company just before new investment comes in. It sets the price per share and how many shares the investor receives.

StartupsIntermediate

SAFE

A SAFE (simple agreement for future equity) is a contract where an investor pays now and gets shares in the next priced round, with no valuation set today.

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Quick check

An investor puts ₪1,000,000 into a company at a ₪4,000,000 pre-money valuation. What is the post-money valuation?

Choose an answer

Frequently asked questions

Do I need to understand post-money before I raise?
Yes, because it is the figure that turns an amount of money into a percentage of your company.
When does the post-money appear?
In a term sheet or a priced round offer, often next to the pre-money. It is the value agreed for the company right after the money arrives.
Can I calculate the post-money from the pre-money?
Yes, add the investment: a ₪4,000,000 pre-money plus ₪1,000,000 is a ₪5,000,000 post-money.
Does the round change my net worth on paper?
Not at the moment of the round. Your shares carry the same price per share just before and just after it, so their paper value stays the same. Later growth raises it, and it stays illiquid until a sale or a listing.
Why does the post-money matter for the cap table?
Together with the fully diluted shares after the round, it gives the price per share and each holder's percentage, which go into the cap table on the day the round closes.
How do I use post-money to compare offers?
Not by the higher number. A bigger raise raises the post-money and the dilution at once. Compare the investor's share, the cheque divided by the post-money, and the pre-money, which is the price.
What goes wrong when post-money is read as cash?
The company plans as if it had the whole valuation to spend. The only cash the round brings is the investment.
What can the post-money include?
Check whether a new option pool created in the round and SAFEs converting in it are counted. A post-money SAFE's cap fixes that SAFE's percentage and is a different number from the priced round's own post-money.
What is post-money valuation in simple words?
The value of the company right after the investor's money goes in: the value before plus the new money.
Is post-money hard to calculate?
No, it is one addition. The judgement sits in the pre-money.
Is post-money the same as market capitalisation?
No. Market capitalisation is the share price of a listed company times its shares, set by trading. A post-money valuation is a price agreed in one private round.
Does calculating the post-money cost money?
No, it is arithmetic done as part of drafting the round.

Sources: Carta, "Pre-Money Valuations vs. Post-Money Valuations" (carta.com/learn), checked September 2026, Y Combinator, SAFE User Guide (ycombinator.com/documents), read September 2026

Last reviewed: 2026-09-24

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