3. Discount, No Valuation Cap If the next round is valued at pre-money value of Rs. 10 crores, and the discount agreed is 20%, then an iSAFE investor of 2 crores will convert at 2/8 i.e. 25% equity. There is no valuation cap. 4. Post Money Valuation Cap with Discount A mix...
For example, if you raise $500k from a SAFE with a $5M post-money valuation cap, you are effectively selling 10% of your company. If you raise $1M with the same post-money valuation cap, that number rises to 20%. The lesson for founders: Pay close attention to how much future equi...
A cap-only SAFE note includes a valuation cap but does not offer a discount. This means the investor’s conversion price is determined by the valuation cap during an equity round, regardless of the actual valuation. While cap only SAFE note provides investors with clear protection against over...
There is one version of the post-money safe, Valuation Cap (no discount), intended for use by companies formed in Canada, Cayman and Singapore, plus an optional side letter for each country. Before using any of these international forms, you should consult with a lawyer licensed in the rele...
there may be the concept of a discount instead of a cap. So, instead of capping the valuation at say $6 million, it says there's a 20% discount on the series A price. There's also an uncapped SAFE, which basically just says, "I'm going to put money in now as an investor and...
What Is the Difference Between “Pre-Money” and “Post-Money” Valuation Cap SAFEs? The difference is how you calculate the “company capitalization”—the denominator in the above calculation of the SAFE price—at the time the SAFE converts. While the most common SAFEs in the marketplace ...
If there’s aconversion discount, the SAFE Note investors get their shares at a discount to the $7.50 the Series A investors pay: If there’s avaluation cap, the SAFE Note investors get their shares at a price equal to the Valuation Cap / Pre-Money Shares: ...
But a few years ago, Y Combinator introduced a new version, known as a ‘Post Money SAFE’ – you can read about it here. In this new version, instead of the SAFE converting at the valuation of your next round (ignoring for now any discount or valuation cap that you may have...
Valuation Cap = $10 million Discount Rate = 20.0% Suppose twelve months later, or one-year after the seed funding, the startup raises a $6 million Series A round at a $20 million pre-money valuation. The Series A represents a priced equity financing round, so the SAFE note converts in...
Pre-money and post-moneySAFEs differ in how the company’s value is determined in a SAFE investment. For a pre-money SAFE, the valuation cap is set before including the amount raised in the SAFE round, which can lead to a greater dilution for founders since all SAFEs and funding affect...