Pre-money is company value BEFORE investment. Post-money is value AFTER investment is added. Post-money = Pre-money + Investment. Investor ownership is calculated using post-money valuation.

Pre-money = Post-money − Investment. Or, if you know the equity percentage: Pre-money = Investment × (100% − Equity%) ÷ Equity%. Example: $1M for 20% means Pre-money = $1M × 80% ÷ 20% = $4M.

Seed rounds typically dilute founders 15-25%. Giving up 20% is common. Over multiple rounds (Seed, A, B, C), founders may retain 10-30% by exit. Target 15-20% dilution per round to preserve enough equity.

Investor Ownership % = Investment ÷ Post-Money Valuation × 100. Example: $1M investment with $5M post-money = $1M ÷ $5M = 20% ownership.

Factors include: traction/revenue, market size, team experience, IP/technology, competitive landscape, previous funding, growth rate, and comparable company valuations. It's ultimately a negotiation.

Investors often require a 10-20% option pool created BEFORE investment, which comes from founders' shares. This effectively lowers the true pre-money valuation. A $4M pre-money with 20% option pool is really $3.2M to founders.

Price per Share = Pre-money Valuation ÷ Existing Shares Outstanding. This determines how many new shares the investor receives: Investment ÷ Price per Share = New Shares.

SAFEs (Simple Agreement for Future Equity) delay valuation until a priced round. They have a valuation cap and/or discount. Priced rounds set explicit pre/post-money valuations and issue shares immediately.

Convertible notes are debt that converts to equity at a future round, typically with a discount (15-25%) and/or valuation cap. The cap sets a maximum conversion valuation, protecting early investors if valuation rises.

By Series A exit: 50-60%. By Series B: 30-40%. By IPO/exit: 10-25% combined. Founders should aim to retain enough to stay motivated and have alignment with investors. Below 20% total can create incentive problems.