Post-Money Valuation
The value of a company immediately after a new investment, calculated as pre-money valuation plus the amount raised.
Post-money valuation equals the pre-money valuation plus the total new capital invested. It represents the total implied value of the company including the fresh cash on its balance sheet. This number is what investors use to calculate their ownership percentage: investment amount divided by post-money valuation equals ownership.
Post-money valuation matters for several practical reasons. It sets the baseline for the next round (future investors will compare against it), it determines the paper value of everyone's shares, and it establishes conversion prices for any outstanding SAFEs or convertible notes with valuation caps.
A common source of confusion is the distinction between pre-money and post-money SAFE caps. A post-money SAFE cap includes the SAFE itself in the ownership calculation, making it easier for investors to know exactly what percentage they are buying. Y Combinator switched to post-money SAFEs as the default specifically to eliminate this ambiguity.
Example
A startup raises $5M at a $15M pre-money valuation. The post-money valuation is $20M. An investor who put in $1M owns 5% ($1M / $20M). If the same startup had used a post-money SAFE with a $20M cap, the investor would know upfront they were buying 5%.
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