How do I calculate post-money valuation?

For a simple primary equity financing, add the new investment to the pre-money valuation. An $8 million pre-money valuation plus $2 million invested gives $10 million post-money. This assumes the investment goes into the company and there are no other capitalization changes.

What if an investor offers $2 million at a $10 million valuation?

Ask whether $10 million means pre-money or post-money. At $10 million pre-money, the post-money is $12 million and the investor owns about 16.67 percent. At $10 million post-money, the pre-money is $8 million and the investor owns 20 percent, before any later dilution.

Does fully diluted mean only the shares already issued?

No. It generally includes issued shares and shares underlying options, warrants, and other rights, with preferred stock counted on an as-converted basis. The treatment of an unallocated option reserve and converting SAFEs or notes depends on the financing definitions. Reconcile the denominator to the signed terms.

Does a higher pre-money valuation always leave founders with more ownership?

Compare the whole capitalization. A larger pool increase or more converting instruments can offset a higher headline valuation. Model existing holders, the pool, converting securities, and new investors together before comparing offers.

Is the round valuation the same as a 409A valuation?

No. A round valuation is negotiated for an investment, usually in preferred stock. A 409A valuation estimates common stock fair market value for equity compensation purposes. The valuation calculator models financing arithmetic and does not produce an appraisal.

Guide

Pre-money versus post-money valuation: a worked example

By the Vanward team · Last updated October 24, 2026

Pre-money valuation is the agreed equity value of a company immediately before a new investment. Post-money valuation is that pre-money value plus the new cash invested. If a company raises $2 million at an $8 million pre-money valuation, the post-money valuation is $10 million and the new investor owns 20 percent, assuming no other changes to the capitalization. The share count used to price the round, converting instruments, and any option pool increase determine how much ownership the existing holders retain.

Start by naming which side of the investment the number describes

A valuation without the words pre-money or post-money leaves the most important part of the offer unresolved. Pre-money describes what the existing equity is valued at for the round. Post-money includes the cash entering the company. Neither number is the cash balance or a promise about the price of a future sale.

For a simple round, post-money equals pre-money plus new investment. Investor ownership is the investment divided by post-money. Existing holders retain the rest when there are no converting securities, pool changes, or other issuances.

A worked example, from valuation to shares

A fictional startup has 8,000,000 fully diluted shares before the financing. It agrees to an $8,000,000 pre-money valuation and raises $2,000,000 of new cash. Assume all existing shares belong to the founders, with no SAFEs, notes, warrants, options, or pool increase.

Step	Calculation	Result
Post-money valuation	$8,000,000 + $2,000,000	$10,000,000
Round price per share	$8,000,000 / 8,000,000 shares	$1.00
New investor shares	$2,000,000 / $1.00	2,000,000 shares
Total shares after the round	8,000,000 + 2,000,000	10,000,000 shares
Investor ownership	2,000,000 / 10,000,000	20 percent
Founder ownership	8,000,000 / 10,000,000	80 percent

The founders still hold 8,000,000 shares. Their percentage falls because the company issues additional shares to the investor. Dilution changes the percentage; it does not remove founder shares from the table.

The same headline can describe a different offer

If the investor instead means $8,000,000 post-money, the same $2,000,000 investment implies $6,000,000 pre-money. The investor buys 25 percent rather than 20 percent. Write both values and the resulting ownership beside each offer so the comparison uses the same basis.

Check the denominator and the option pool

The round price divides pre-money value by the agreed fully diluted share count. Adding an option reserve to that count lowers the price per share. If a new pool equal to 10 percent of the post-round total is included in the pre-money of the worked example, founders retain 70 percent, the pool represents 10 percent, and the new investor still owns 20 percent. The pool is a reserve for future grants, not another cash investment.

Use the pre-money and post-money valuation calculator to repeat the example with your inputs. Enter 8,000,000 existing fully diluted shares and start with a zero pool top-up, then compare a 10 percent top-up before and after investment. The calculator treats the top-up as additional to the shares you enter. It does not convert SAFEs or notes.

Keep the financing assumptions with the cap table

Record the valuation basis, new cash, fully diluted definition, pool treatment, and any converting instruments together. Reconcile the resulting share counts to the financing documents with counsel. A headline valuation becomes useful when everyone agrees what is included in it and can reproduce the ownership table.

Questions founders ask

How do I calculate post-money valuation?: For a simple primary equity financing, add the new investment to the pre-money valuation. An $8 million pre-money valuation plus $2 million invested gives $10 million post-money. This assumes the investment goes into the company and there are no other capitalization changes.
What if an investor offers $2 million at a $10 million valuation?: Ask whether $10 million means pre-money or post-money. At $10 million pre-money, the post-money is $12 million and the investor owns about 16.67 percent. At $10 million post-money, the pre-money is $8 million and the investor owns 20 percent, before any later dilution.
Does fully diluted mean only the shares already issued?: No. It generally includes issued shares and shares underlying options, warrants, and other rights, with preferred stock counted on an as-converted basis. The treatment of an unallocated option reserve and converting SAFEs or notes depends on the financing definitions. Reconcile the denominator to the signed terms.
Does a higher pre-money valuation always leave founders with more ownership?: Compare the whole capitalization. A larger pool increase or more converting instruments can offset a higher headline valuation. Model existing holders, the pool, converting securities, and new investors together before comparing offers.
Is the round valuation the same as a 409A valuation?: No. A round valuation is negotiated for an investment, usually in preferred stock. A 409A valuation estimates common stock fair market value for equity compensation purposes. The valuation calculator models financing arithmetic and does not produce an appraisal.