Equity Dilution = SAFE Amount / Valuation Cap 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%. ...
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...
While cap only SAFE note provides investors with clear protection against overvaluation it may not be ideal for startups in their early stages. Discount Only A discount-only SAFE note offers a percentage discount on the share price during an equity round, without setting a valuation cap. ...
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...
If there’s avaluation cap, the SAFE Note investors get their shares at a price equal to the Valuation Cap / Pre-Money Shares: Step 3: Calculate Each Group’s New Shares in this Priced Round The next step is tocalculate the shareseach group purchases or receives in this round based on...
money on a priced round. There are minimal negotiations with a SAFE. Really, there's only two things that you're probably going to negotiate with the investor, which is how much money you're going to...how much money the investor will put into the company and at what valuation cap. ...
What if the pre-money valuation of the company in the Equity Financing is lower than the Valuation Cap in a safe? The Valuation Cap is inapplicable in this situation. A safe holder gets the same preferred stock, at the same price, with the same liquidation preference, as the other investor...
The investor pays in full up-front for the right to receive a variable number of shares of preferred stock as part of the corporation’s first priced equity round, typically at a discount and sometimes with a valuation cap.[2] The investor is generally treated as selling a capital asset ...
Share Price = $20 million Pre-Money Valuation ÷ 10 million Pre-Money Shares Outstanding = $2.00 Per Share With a 20% discount, investor’s share price is equal to $1.60 per share. Share Price = $2.00 x (1 – 20.0%) = $1.60 per share However, due to the valuation cap of $10...
The valuation cap sets the maximum price that your convertible securities will convert into equity. 1. Events 1.1 Equity financing In the event of an Equity Financing agreement, which referred to a transaction or series of transactions with the principal purpose of raising capital, is reached ...