Post-Money Valuation

Post-money valuation equals pre-money valuation plus the amount raised in the current round. If a company is valued at $90M before a round and raises $10M, its post-money valuation is $100M. This figure determines the new investors' ownership percentage and reprices all existing shares (on a fully diluted basis).

Post-money valuations are widely reported and are the standard benchmark used in press releases and secondary market comparisons. However, they can be misleading if taken at face value: they reflect the price paid for the most recent marginal unit of preferred equity, not the value of the whole enterprise to common shareholders.

Illustrative example: a company raises $20M at a $100M post-money valuation. The new investors own 20% ($20M / $100M). If the company already had $50M of liquidation preferences from prior rounds, the $100M post-money doesn't mean every share is worth $1.00 — it means the marginal new preferred is priced to imply that, assuming the preferences don't dominate an exit.

The edge the pros know: post-money valuations compound with each round, and the press tends to report them cumulatively as "now valued at $X billion." But if a company raises $500M at a $10B valuation with extensive liquidation preference and ratchets, the common shareholders' actual economic interest may be worth far less. Always read the preference stack, not just the headline number.