In a simple priced startup round, post-money valuation equals pre-money valuation plus new primary investment. A new investor's ownership is their investment divided by the post-money valuation. That shortcut works only when the share-count assumptions are consistent and additional securities or option-pool changes do not alter the calculation.
The startup investment platform map explains different access routes. Whichever route you use, examine the round's capitalisation table, often called a cap table. A platform's minimum ticket does not tell you how much of the company your money buys.
What pre money and post money mean
Pre-money valuation describes the negotiated company value before the new investment. Post-money valuation includes the new primary capital. These are financing terms, not a promise that the company could be sold for the stated amount.
Carta explains the relationship between the two valuations. For a straightforward $8 million pre-money round with $2 million of new capital, the post-money valuation is $10 million.
The new investors collectively acquire 20% under the simple model: $2 million divided by $10 million. Dividing by the $8 million pre-money figure would incorrectly produce 25%.
The word primary matters. If a buyer purchases existing shares from a founder, the money goes to the seller rather than increasing the company's cash. Do not add a secondary purchase to the company's new cash as if it were newly issued equity.
Calculate the share price and your ownership
The price per share connects a valuation to an actual share allocation. Divide the pre-money valuation by the agreed pre-round fully diluted share count, then calculate the shares issued for the new investment.
Here is an illustrative round without outstanding convertibles, a pool expansion, fees or secondary sales. Assume 4 million pre-round shares on the agreed basis, an $8 million pre-money valuation and $2 million of new investment.
The share price is $8 million divided by 4 million, or $2. The round issues 1 million new shares, producing 5 million shares after closing. An investor contributing $50,000 receives 25,000 shares and owns 0.5% immediately after the round.
Round measure | Calculation | Result |
|---|---|---|
Price per share | $8,000,000 divided by 4,000,000 | $2 |
New shares issued | $2,000,000 divided by $2 | 1,000,000 |
Total shares after closing | 4,000,000 plus 1,000,000 | 5,000,000 |
Investor shares | $50,000 divided by $2 | 25,000 |
Investor ownership | 25,000 divided by 5,000,000 | 0.5% |
The investor's percentage is an ownership measure at a specific moment. It does not establish exit proceeds, voting power or the cash received after vehicle-level expenses.
Why fully diluted share counts matter
The denominator must match the definition used in the financing documents. A fully diluted calculation can include reserved options and securities that are not currently ordinary issued shares.
Carta's guide to priced rounds describes the negotiation of the share price, security terms and cap table. Ask for the pro forma cap table showing the position after the round, rather than rebuilding it from a pitch-deck headline.
Read the footnotes around options, warrants and convertible instruments. If the headline valuation assumes one share count while the ownership illustration uses another, the two figures cannot be compared directly.
For an investment through a vehicle, distinguish the vehicle's company ownership from your percentage of the vehicle. Neither percentage should be presented as the other.
How an option pool changes the result
Creating or expanding an employee option pool increases the equity reserved for employees. The timing determines which holders absorb the associated dilution.
Carta distinguishes pre-money and post-money pool increases. A pool included in the pre-money share count generally places that dilution on existing holders. A pool added after closing can dilute the new investors too. The term sheet and closing calculations determine the exact result.
Suppose the simple round above closes with 5 million shares on its stated basis. If the company subsequently adds 500,000 shares to the fully diluted denominator, the investor's 25,000 shares represent approximately 0.455% of 5.5 million. The investor still holds 25,000 shares.
This is a separate, simplified pool-expansion example. A negotiated target pool percentage can require different arithmetic, especially when an existing unallocated pool is already included. Request both the pre-round and post-round definitions before comparing offers.
What a later funding round does to your stake
New share issuance reduces an existing holder's percentage if they do not acquire additional shares. The percentage loss can occur even if the next round uses a higher valuation.
Assume an investor owns 0.5% immediately before a later round. If new investors receive 20% of the company after that round and there are no other changes, existing holders retain 80% collectively. The investor's stake becomes 0.5% multiplied by 80%, or 0.4%.
A pro rata right may let an eligible investor maintain ownership by buying more shares. It is a contractual right, subject to its terms, allocation and additional capital. It should not be assumed from participation in the previous round.
Separate ownership dilution from economic value. A smaller percentage of a more valuable company can be worth more on paper. That observation does not make the value liquid or guarantee an eventual sale.
When the simple valuation formula is insufficient
The shortcut needs adjustment when the transaction includes converting securities, multiple closings, a pool top-up or different share classes. A simple agreement for future equity, or SAFE, is not interchangeable with a priced equity purchase.
For SAFE or note conversions, use the instrument's own definitions and the financing cap table. A valuation cap is a conversion term, not automatically the current value of the company. Avoid combining pre-money and post-money SAFE assumptions in one shortcut.
Different share classes can also receive different amounts on exit. An ownership percentage alone cannot resolve liquidation preferences or other priority rights. The investment documents must explain those terms.
Documents to request before accepting the percentage
Request the term sheet, security terms and a dated pro forma cap table using consistent assumptions. The numbers should reconcile from the price per share to the shares issued and the resulting percentage.
If the percentage changes between the initial presentation and closing, ask which input changed. A new pool, a larger round or converting securities may explain the difference. Do not accept an unexplained percentage merely because the headline valuation stayed the same.