Post-Money Valuation
Definition
Post-money valuation is the estimated value of a company immediately after receiving a new round of investment, calculated by adding the investment amount to the pre-money valuation. It represents the total enterprise value including newly invested capital and directly determines each investor's ownership percentage.
Formula
Overview
Post-money valuation equals the pre-money valuation plus the new investment. It is the denominator used to calculate each investor's ownership: their investment divided by the post-money valuation yields their percentage ownership.
Post-money valuation is particularly important in the context of post-money SAFEs, which Y Combinator popularized. A post-money SAFE explicitly uses the post-money valuation cap as the denominator, making dilution calculations straightforward. If you raise $1M on a $10M post-money SAFE, that investor will own exactly 10 % when the SAFE converts.
It is critical to distinguish between post-money valuation and what the company is actually "worth" in terms of underlying business value. Post-money valuation includes undeployed cash sitting in the bank. A $10M post-money company that just received $3M has only $7M of enterprise value attributed to the business itself.
Example
A startup with a $6M pre-money valuation raises $2M. Post-money valuation = $6M + $2M = $8M. The investor owns $2M ÷ $8M = 25 %.
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