Glossary Category: Funding Investment

Post-money valuation equals pre-money valuation plus the amount of new money raised in the round, and a new investor’s ownership percentage is calculated as their investment divided by the post-money valuation. When you see a startup described in the press as “now valued at $X,” that figure is nearly always the post-money number, since it’s the larger, more headline-friendly figure and the one both the company and investors have the most incentive to publicize.

A nuance worth remembering: post-money valuation is a negotiated figure reflecting expected future growth and investor confidence, not a literal statement of how much cash the company has in the bank or what its assets are worth on a balance sheet — a startup can have a high post-money valuation and still be losing money every month.

🇵🇭 Philippine Example

Voyager Innovations, the parent company of PayMaya and Maya Bank, is publicly reported to have reached a post-money valuation of US$1.4 billion after its US$210 million raise in April 2022 — making it the clearest, most well-documented post-money valuation benchmark disclosed in the Philippine startup market to date, alongside Mynt/GCash's US$300 million unicorn round in November 2021.

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Pre-money valuation plus the amount of new money being raised equals post-money valuation — it’s the starting point of the math that determines how much equity new investors get for their check and how much existing shareholders get diluted. Because it directly sets the price per share, pre-money valuation is one of the most heavily negotiated numbers in any term sheet.

A nuance that trips up beginners reading startup news: the valuation figure quoted in a press release or headline is almost always the post-money figure, not pre-money, since post-money is the more impressive, larger-sounding number for a press release. To find the implied pre-money valuation from a headline, you generally need to subtract the round size from the reported valuation yourself — the two numbers are easy to mix up if you don’t know which convention is being used.

🇵🇭 Philippine Example

Voyager Innovations (Maya) was reported to reach a valuation of US$1.4 billion after its US$210 million raise in April 2022. Press coverage of that figure follows the standard convention of reporting the post-money valuation, so the implied pre-money valuation would be roughly US$1.19 billion (US$1.4 billion minus the US$210 million raised) — this is our own calculation from the two publicly reported figures, not an officially disclosed pre-money number.

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Every time a startup raises a new round, it issues new shares to the new investors, which means the total number of shares outstanding grows — so everyone who already held shares now owns a smaller percentage of the whole, even though the company itself may be worth much more than before. Creating or expanding an employee option pool has the same diluting effect on existing shareholders, since it sets aside shares that don’t yet belong to anyone specific but still count against the total.

Dilution matters because founders need to think in terms of the actual value of their shrinking slice, not just the percentage number — a smaller percentage of a much bigger, more valuable company can still be a better outcome than a larger percentage of a company that never grows. It becomes a real concern when dilution is unusually steep relative to the capital raised, for example when an investor insists on a large new option pool being carved out of the pre-money valuation rather than the post-money.

Existing investors often negotiate pro-rata rights specifically to protect against dilution — the right to invest again in future rounds just to maintain their existing percentage, rather than automatically shrinking with every new round.

🇵🇭 Philippine Example

As is typical anywhere, a Philippine startup that raises a seed round, then a Series A, then a Series B and beyond — the general pattern publicly reported for companies like Kumu — sees its founders' ownership percentage shrink at each stage even as the company's overall value rises, since exact founder ownership percentages are not typically disclosed publicly in Philippine funding announcements.

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Unlike valuing a mature company using profits or discounted cash flow, an early-stage startup’s valuation is set through negotiation — based on comparable recent deals, market size, growth rate, team strength, and how much leverage the founder has (multiple interested investors versus one). The two numbers that matter are pre-money valuation (the agreed worth before new investment) and post-money valuation (pre-money plus the new cash raised).

Valuation directly determines how much equity a founder gives up for a given check size — a higher valuation means less dilution for the same amount raised. It matters enormously to headlines and founder morale, but it isn’t purely good news at any level: a valuation set too high relative to actual growth can make the next round harder to raise, sometimes forcing a “down round” (a new round priced lower than the last one), which is demoralizing and dilutive for everyone already on the cap table.

A nuance worth knowing: press coverage of a “$X valuation” almost always means the post-money figure, not pre-money — the two are easy to conflate when reading funding news casually.

🇵🇭 Philippine Example

Voyager Innovations, the parent of PayMaya and Maya Bank, raised US$210 million in April 2022 at a reported valuation of US$1.4 billion, making it the Philippines' second unicorn (a startup valued at $1 billion or more) after Mynt, the operator of GCash, which reached unicorn status via a US$300 million round in November 2021 — the two clearest publicly disclosed unicorn valuations in the Philippine startup market to date.

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A capitalization table (cap table) lists every shareholder and option holder in a company, how many shares or options each holds, what class of shares they are (common vs. preferred, which usually carry different rights), and what percentage of the company that represents. A proper cap table shows this on a fully diluted basis — meaning it counts not just shares already issued, but also the entire option pool set aside for future employees, even before those options are granted or exercised.

The cap table matters because every new funding round adds new rows (new investors) and changes every existing shareholder’s percentage, even if the dollar value of their stake goes up. Investors scrutinize the cap table closely during due diligence, and a messy, inconsistent, or informally-tracked cap table (verbal promises, undocumented advisor equity, forgotten option grants) is one of the most common reasons a promising deal stalls or falls apart entirely.

A nuance beginners often miss: the “ownership percentage” quoted casually in conversation is usually the fully diluted number, which is always lower than a founder’s current outstanding-shares percentage — the difference is exactly the size of the option pool and any convertible instruments still waiting to convert.

🇵🇭 Philippine Example

Philippine startups maintain cap tables reflecting share classes issued under the Revised Corporation Code, and any issuance or transfer of shares generally needs to be reflected in filings with the Securities and Exchange Commission. As in other markets, an inaccurate or informally-tracked cap table is a common red flag that comes up when a Philippine startup goes through due diligence for its first institutional round.

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A term sheet summarizes the core deal points — how much is being invested, at what valuation, what type of shares the investor gets, board seat and information rights, liquidation preference, anti-dilution protection, and pro-rata rights for future rounds — in a few pages, before lawyers draft the full, legally binding definitive agreements. Most of a term sheet is explicitly non-binding, meaning either side can still walk away, except for a few sections that are binding by design, like confidentiality and exclusivity (also called a “no-shop” clause, which blocks the founder from shopping the deal to other investors for a set period).

Signing a term sheet is a strong signal of serious intent and usually kicks off the due diligence period, but it is not the same as money actually landing in the company’s bank account. For founders, the headline valuation number is often the least important part to negotiate hard on — terms like liquidation preference and board control tend to matter far more to the eventual outcome than a slightly higher or lower price.

A common beginner mistake is treating the term sheet as a formality since it “looks simple” — first-time founders should still have a lawyer review it carefully, since standard-looking clauses can hide meaningfully founder-unfriendly terms.

🇵🇭 Philippine Example

Philippine funding rounds — whether from an angel network, a VC fund, or a corporate investor — generally follow this same term-sheet-then-definitive-agreement sequence. Once a deal closes, the issuance of new shares typically also requires updating the company's Articles of Incorporation or share records with the Securities and Exchange Commission, an extra local compliance step layered on top of the usual term sheet and closing documents.

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A VC firm raises a pooled fund from its own investors (called limited partners, or LPs) and then invests that fund into a portfolio of startups, expecting most to fail but a few to grow big enough to return the whole fund many times over. Unlike an angel writing a personal check, a VC firm is investing other people’s money and answers to them — which is part of why VC deals come with more formal governance: board seats, information rights, protective provisions, and structured follow-on rounds.

VCs typically specialize by stage (seed, Series A, growth) and sometimes by sector, and a lead VC in a round usually sets the price (valuation) and terms that other investors in the same round follow. For founders, taking VC money means accepting outside oversight and a growth-at-scale expectation in exchange for larger checks than angels or bootstrapping can provide.

The nuance: not every business should raise VC money — VCs need a path to a very large outcome to make their model work, so a solid, profitable business that will stay modest-sized is often a poor fit for venture capital even if it’s a genuinely good business.

🇵🇭 Philippine Example

Several VC firms actively invest in Philippine startups, including Wavemaker Partners, Kickstart Ventures (the corporate VC arm of Globe Telecom), Foxmont Capital Partners, and Openspace Ventures. These firms have participated in real, publicly reported Philippine deals — for example, Wavemaker Partners was an investor in GrowSari's $77.5 million Series C round, and Kickstart Ventures and Foxmont Capital both participated in Kumu's Series B.

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