Pre-money vs. post-money valuation
Two numbers, one word apart, and they change your ownership percentage significantly. Getting this backwards is one of the most common mistakes new angels make.
The definitions
Pre-money valuation
What the company is worth immediately before your investment (and everyone else’s in the round) is added.
Post-money valuation
Pre-money valuation plus the total amount raised in the round. This is what the company is worth right after the money lands, and the number your ownership percentage is actually calculated against.
Why the difference matters
A founder or platform casually saying "we're raising at a $10M valuation" is ambiguous — ask explicitly whether that is pre- or post-money, because it changes your ownership percentage by exactly the size of the round.
A worked example
| If $10M is pre-money | If $10M is post-money | |
|---|---|---|
| Pre-money valuation | $10,000,000 | $9,000,000 |
| Amount raised | $1,000,000 | $1,000,000 |
| Post-money valuation | $11,000,000 | $10,000,000 |
| New investors own | 9.1% | 10.0% |
Same $1M round, same headline "$10M valuation" — a full percentage point of ownership difference depending on which one it refers to.
How LATAM angels see valuation set in practice
SAFE valuation caps
Most pre-seed and seed deals in the region use SAFEs with a valuation cap rather than a fully negotiated valuation. The cap functions as a ceiling on the price your money converts at — the actual valuation is set later, at the next priced round.
Comparable rounds
Absent a lead investor or formal 409A-style appraisal, early valuations in LATAM are often benchmarked informally against recent rounds of comparable startups in the same country or sector — ask what comparables the founder used.
Traction-based negotiation
At seed and beyond, revenue multiples or growth-rate benchmarks (common in SaaS and fintech) increasingly anchor valuation conversations, replacing pure narrative-based pricing.