Startup Investing

Valuation Cap

Definition

What is Valuation Cap?

The maximum valuation used to convert a SAFE or convertible instrument into equity.

Example in practice

A ₦300 million cap rewards early investors if the next round values the company at ₦600 million.

Keep learning

A preliminary document outlining the main commercial terms of a proposed investment.

A company's agreed value immediately before a new investment.

A company's value immediately after adding new investment capital.

The rate at which a company spends cash, commonly measured monthly.

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