Glossary · Fundraising instruments
Valuation cap
A ceiling on the company value used to calculate how many shares an early SAFE or note holder gets when it converts. It rewards people who took risk early.
Related: SAFE · Convertible note · Pre-money valuation
A bit more nuance▾
- A cap is not the same as “what the company is worth today.”
- Very high caps can mean less upside for early believers if you moonshot.
Go deeper▾
Discussion questions▾
- If you outperform the cap, who benefits most?
- How would you explain your cap to a non-financial teammate?
Educational reference only — not legal, tax, or investment advice. Terms vary by country and deal; ask a qualified professional when it matters.