Intro.
#Pre-Money vs. Post-Money — Where the Math Starts
| Term | Definition | Formula |
|---|
| Pre-money valuation | Company value immediately before the investment | Post-money − investment amount |
| Post-money valuation | Company value immediately after the investment | Pre-money + investment amount |
| Investor ownership | Stake held by the new investor | Investment amount ÷ post-money |
| Existing shareholder dilution | Reduction in existing shareholders' ownership | Investment amount ÷ post-money |
Example: pre-money of ₩2B, investment of ₩500M → post-money of ₩2.5B, investor stake of 20% (₩500M ÷ ₩2.5B). Know this one formula and you can instantly calculate dilution on any seed deal.
주의
When an investor says 'valuation of ₩2.5B,' always confirm whether they mean pre-money or post-money. On a ₩500M deal, pre-money ₩2.5B versus post-money ₩2.5B changes your dilution from 16.7% to 20%.
02
#Four Factors That Determine Seed Valuation
| Factor | Influence | Evaluation Criteria |
|---|
| Traction | ★★★★ | Users, revenue, signed MoUs, number of interviews |
| Team | ★★★★ | Domain expertise + full-time commitment + track record |
| Market size | ★★★ | Consistency across TAM, SAM, and SOM |
| Competitive landscape | ★★ | Direct and indirect competitors + barriers to entry |
For a pre-traction seed round (zero revenue), team, market, and 'why now' determine almost everything. Once real traction shows up, valuation typically jumps 2-3x.
03
#SAFE, Convertible Note, and Priced Equity — Three Structures
| Structure | Characteristics | When It's Used |
|---|
| SAFE | No valuation set + guaranteed future conversion | The Y Combinator standard. Fast-closing deals. |
| Convertible Note | Interest + maturity date + valuation cap | Traditional bridge rounds |
| Priced equity | Fixed valuation + preferred stock | Formal seed rounds (₩500M+) |
The SAFE (Simple Agreement for Future Equity) was introduced by Y Combinator in 2013. It defers the valuation negotiation and converts automatically at Series A. It's fast and clean, which is why it became the seed-stage standard.
TIP
In Korea, a simplified shareholders' agreement paired with preferred stock is still more common than a SAFE. That said, deals involving global VCs tend to favor the SAFE structure.
04
#SAFE Conversion Simulation — How the Cap and Discount Work
A SAFE operates through two protective mechanisms: the valuation cap and the discount.
| Mechanism | Definition | Example |
|---|
| Valuation Cap | The maximum valuation applied at conversion | Cap of ₩3B → even if Series A prices at ₩5B, conversion still happens on a ₩3B basis |
| Discount | Discount applied to the Series A price | 20% discount → if Series A is ₩5B, conversion happens on a ₩4B basis |
| Most Favored Nation | Automatically matches the lowest price offered | If a later SAFE gets better terms, earlier investors are matched automatically |
| Conversion trigger | Series A or a liquidity event | Seed SAFE investors end up holding Series A preferred stock |
Example simulation: a ₩500M SAFE (₩3B cap, 20% discount) converts at a Series A valuation of ₩5B. Under the cap: ₩500M ÷ ₩3B = 16.7%. Under the discount: ₩500M ÷ ₩4B = 12.5%. Whichever is more favorable — here, the cap at 16.7% — is automatically selected.
05
#Cumulative Dilution — Seed to Series A to Series B
'Cumulative dilution' is the thing founders most often overlook. Give up 20% at seed, 25% at Series A, and 20% at Series B, and it's genuinely hard to intuit what that does to your own stake.
| Stage | Investor Ownership | Founder Remaining | Cumulative Dilution |
|---|
| Right after founding | 0% | 100% | 0% |
| 15% option pool created | 0% | 85% | 15% |
| Seed (20%) | 20% | 68% | 32% |
| Series A (25%) | 25% new + 15% from seed | 51% | 49% |
| Series B (20%) | 20% new + existing | 40.8% | 59.2% |
주의
If a founder's stake drops below 40% after Series B, securing voting control at an IPO or M&A becomes difficult. Consider protections like weighted voting rights, convertible preferred structures, or a dual-class share structure as early as the seed stage.
06
#Standard Korean Seed Pricing Benchmarks (2026)
| Round | Investment Amount | Pre-Money Valuation | New Investor Stake |
|---|
| Pre-Seed | ₩50M-₩200M | ₩500M-₩1B | 10-20% |
| Seed | ₩200M-₩1B | ₩1B-₩3B | 15-25% |
| Pre-A | ₩1B-₩3B | ₩4B-₩8B | 15-25% |
| Series A | ₩3B-₩10B | ₩10B-₩30B | 20-30% |
These figures are averages for IT, SaaS, and AI companies; deep tech and biotech typically run 1.5-2x higher. Companies that raise a seed round after receiving government support (e.g., Korea's Pre-Startup Package or TIPS) tend to see valuations rise by roughly 20-30%.
TIP
A seed round with real traction (validated revenue or users) can command a pre-money valuation of ₩3B-₩5B. For a pre-traction seed, ₩1B-₩2B pre-money is standard — going higher than that on team and market story alone is difficult.
Summary.
#Self-Check: Simulating Your Own Valuation
- Which stage does your company actually fall into — Pre-Seed, Seed, Pre-A, or Series A? (Based on traction and revenue.)
- Have you researched 5-10 comparable pre-money valuations from similar-stage deals in your industry?
- Which structure is your deal closest to — SAFE, convertible note, or priced equity?
- Are you setting up the option pool before or after the seed round? (Before = founder dilution; after = investor dilution.)
- Does your target raise cover 12-18 months of operating expenses through Series A?
- Have you simulated how the cap and discount terms will actually convert at Series A?
- Does your ownership stay above 30% by year five? (The threshold for retaining meaningful voting control.)
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