Valuations & Dilution

Every time a startup sells new shares, existing owners own a smaller slice. Here is how pre-money and post-money valuations work, how dilution adds up across rounds and why headline valuations can mislead.

Pre-money and post-money

If investors put $2 million into a startup valued at $8 million before the investment (pre-money), the company is worth $10 million after (post-money). The new investors own $2 million ÷ $10 million = 20%. Everyone else’s ownership shrinks by that 20%.

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