What is Valuation Cap?
A term in a SAFE or Convertible Note that sets the maximum valuation at which the investor's money will convert into equity. It protects early investors from excessive dilution if the company's valuation skyrockets before the next priced round.
Understanding Valuation Cap is critical for startup founders navigating the venture capital ecosystem. Whether you are actively fundraising or just planning your capital strategy, grasping these terms helps you negotiate better deals and find the right investment partners.
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