Valuation & Dilution
Valuation is vanity; ownership is reality.
The Basic Formula
Post-Money = Pre-Money + Investment Amount. The investor's ownership percentage is calculated on the Post-Money valuation. If they invest $2M on an $8M Pre-Money, they own 20% ($2M / $10M).
Dilution Reality
Founders assume that if they own 100% and sell 20%, they are left with 80%. But this ignores the option pool and convertible notes converting. In reality, a standard Series A will dilute founders by 25-35% when factoring in the SAFE conversions and the Option Pool Shuffle.