Why post-money valuation matters to a first-time founder
The post-money figure decides how much of your company an investor owns, so it matters more than the headline valuation. If you confuse it with the pre-money figure you can give away more equity than you planned, and the error carries into every later round. It also becomes the reference price for your next raise: investors compare your next pre-money valuation with this number to judge whether the company has grown in value.
Examples of post-money valuation
You and an investor agree the company is worth ₦900 million before the round. They add ₦100 million. The post-money valuation is ₦1 billion, and they own 10%. The ₦900 million is the pre-money valuation. The ₦1 billion is the number after their cash is in. Neither figure is money the company already had. One of them includes the new cheque. The other does not.
Common misunderstanding
People quote a valuation and skip the word before or after. A “₦1 billion valuation” might mean the price before the money, in which case ₦100 million buys less than 10%, or the price after, in which case it buys exactly 10%. The percentage you keep lives in that difference. So does dilution.
When to use it
Use it whenever an investor names a valuation, a term sheet arrives or you model a round in your cap table. Ask whether the figure is pre-money or post-money and write both down. Then divide the investment by the post-money valuation to get the investor’s percentage before you agree. For SAFEs and convertible notes, check whether the cap is stated pre-money or post-money, because the dilution differs.