Startup Investing
Valuation Cap
Definition
What is Valuation Cap?
The maximum valuation used to convert a SAFEA contract providing a right to future equity under specified financing or liquidity events, without being ordinary debt. or convertible instrument into equity.
Example in practice
How This Looks in Practice
A ₦300 million cap rewards early investors if the next round values the company at ₦600 million.
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Related Terms
Startup Investing
Term Sheet
A preliminary document outlining the main commercial terms of a proposed investment.
Startup InvestingPre-Money Valuation
A company's agreed value immediately before a new investment.
Startup InvestingPost-Money Valuation
A company's value immediately after adding new investment capital.
Startup MetricsBurn Rate
The rate at which a company spends cash, commonly measured monthly.