Post-money valuation is a way to measure how much a company is worth right after it receives investment money. It's like taking a snapshot of a company's value immediately after investors put money in. For example, if a company was worth $8 million before investment (pre-money) and receives $2 million from investors, the post-money valuation would be $10 million. This term is very important in venture capital because it helps determine how much of the company each investor owns. Recruiters often see this term in resumes of people who work in venture capital, private equity, or startup investments.
Led investment analysis resulting in 5 deals with Post-money Valuation ranging from $10M to $50M
Developed financial models to determine Post-money Valuations for Series A investments
Negotiated term sheets based on Post-Money Valuation for early-stage startups
Typical job title: "Venture Capital Analysts"
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Q: How would you explain the relationship between post-money valuation and dilution to a first-time founder?
Expected Answer: Should demonstrate ability to clearly explain complex concepts: how new investment affects ownership percentages, using simple examples to show how existing shareholders' ownership gets reduced after new investment while maintaining the same value of their shares.
Q: What factors do you consider when determining if a post-money valuation is reasonable?
Expected Answer: Should discuss market conditions, comparable companies, growth rates, revenue multiples, team quality, market size, and competitive landscape in simple terms with real examples.
Q: How do you calculate post-money valuation, and what are its limitations?
Expected Answer: Should explain the basic formula (pre-money + new investment = post-money) and discuss how different types of shares or convertible notes might complicate the calculation.
Q: What's the difference between post-money and pre-money valuations, and why does it matter?
Expected Answer: Should clearly explain timing difference (before vs after investment), and how this affects ownership calculations and investor negotiations.
Q: What is a post-money valuation cap in a convertible note?
Expected Answer: Should explain that it's the maximum company value at which the note converts to equity, protecting early investors from excessive dilution.
Q: If a company raises $5M at a $20M post-money valuation, what percentage does the investor own?
Expected Answer: Should be able to do basic math: $5M divided by $20M equals 25% ownership for the new investor.