A simple contractual agreement a company makes with an investor guaranteeing them equity in a future priced financing round. This is now the standard for seed investing because of its simplicity and low co
Valuation cap (or “cap”)
The pre-money conversion price of the investment. These valuation caps apply to convertible notes, which is a hybrid of debt and equity, as well as SAFEs (referenced above). These caps protect investors and allow companies to postpone setting valuations.
The valuation of a company prior to investment or financing. Once a company receives investment and the capital hits the bank, it will have a post-money valuation.
The company’s valuation after the investment (pre-money valuation + amount invested = post-money valuation).