Term sheet & cap table

Pre-money vs post-money

Valuation before and after the new investment. The pair that sets ownership and dilution in a round.

Written byDenis VoldmanHead of Product, DealMatrix
Edited byPhilipp SakulerBusiness Development, DealMatrix
Reviewed by✓ Berthold Baurek-KarlicCEO, Venionaire Capital & DealMatrix
Business Angel of the Year 2023
Updated10.06.20264 min read

Pre-money valuation is what a company is worth before a new investment. Post-money valuation is the pre-money figure plus the new money raised. If a company is valued at 8 million pre-money and raises 2 million, the post-money value is 10 million and the new investor owns 20 percent.

The distinction matters because ownership is calculated on the post-money figure. Founders who quote only the pre-money number can misjudge how much they are giving away, especially across several rounds where dilution compounds. The venture capital method solves for the post-money value directly from a target exit and required return.

Post-money is a reference point, not the value of every share. Once liquidation preferences are layered in, the per-share value of common and preferred stock can diverge sharply. See Liquidation Preferences and the Cap-Table Waterfall.

Related

ArticleDCF and the VC MethodHow the VC method sets post-money.GlossaryLiquidation preferenceWhy ownership is not enough.GlossaryDown roundWhen the math turns against founders.

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