Finance & Moneyadvanced
Valuation Cap
Definition
The maximum company valuation at which an early investor convertible investment will turn into shares.
Why it matters
A valuation cap rewards early investors for backing you sooner by giving them a better share price if your value rises.
Example
An angel invests on a SAFE with a £5m cap, so their money converts at £5m even if you later raise at £10m.
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