Glossary

Valuation Cap

A Valuation Cap can be used to determine the price per share at which a convertible note or SAFE will convert into equity of the Company. In the case where a convertible instrument uses a valuation cap, the instrument will convert at a price per share equal to the lower of (a) the valuation cap divided by the company's capitalization and (b) the price per share paid by new money investors in the financing.