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1. • • A "valuation cap" entitles note holders to convert the outstanding balance on the note into shares of stock at the lower of (i) the valuation cap or (ii) the price per share in a qualified financing (or, if there is a discount in the note, then the discounted price per share).
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     What Is a Valuation Cap? | Startup Law Blog | Davis Wright ...

2. www.dwt.com · 2020 · 07What Is a Valuation Cap? | Startup Law Blog | Davis Wright ...

   www.dwt.com · 2020 · 07

   

   Jul 8, 2020 · A "valuation cap" entitles note holders to convert the outstanding balance on the note into shares of stock at the lower of (i) the valuation cap or (ii) the price per share in a qualified financing (or, if there is a discount in the note, then the discounted price per share).

3. People also ask

   How does a valuation cap work?

   • A "valuation cap" entitles note holders to convert the outstanding balance on the note into shares of stock at the lower of (i) the valuation cap or (ii) the price per share in a qualified financing (or, if there is a discount in the note, then the discounted price per share).

   What Is a Valuation Cap? | Davis Wright Tremaine

   www.dwt.com/blogs/startup-law-blog/2020/07/what-is-a-valuation-cap

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   What is a value cap?

   • This pre-negotiated sum "caps" the conversion price once shares are issued and represents the highest valuation at which an investor can convert a SAFE into equity. Startup entrepreneurs frequently propose value caps as incentives to entice early investors because investing in startups involves considerable risk.

   Valuation Cap: Everything You Need to Know - Contract Lawyers

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   What happens if a note has a valuation cap?

   • Holders of notes with a "valuation cap" have the option to convert the remaining principal into stock at the lower of- (i) the valuation cap or (ii) the share price in a qualifying financing (or, if there is a discount in the note, then the discounted price per share ). It is not a value of the business based on its current assets or plans.

   Valuation Cap: Everything You Need to Know - Contract Lawyers

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   Are caps a valuation?

   • Founders should not let investors get away with the argument that caps are valuations. If founders and investors were setting the valuation, then they should be doing an equity round. Caps protect investor’s upside risk by setting a floor on their purchase price, but they are not valuations.

   What Is a Valuation Cap? | Davis Wright Tremaine

   www.dwt.com/blogs/startup-law-blog/2020/07/what-is-a-valuation-cap

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4. www.fullstack.com.au · valuation-cap-what-does-itValuation Cap: What Does it Mean And Why is it Important?

   www.fullstack.com.au · valuation-cap-what-does-it

   

   Aug 29, 2020 · Put simply, a valuation cap ensures that an investor’s contribution to a startup or company via a SAFE or convertible note is converted into equity at a set maximum price.

5. www.growthlabfinancial.com · what-is-a-valuation-capWhat is a Valuation Cap? - GrowthLab Financial

   www.growthlabfinancial.com · what-is-a-valuation-cap

   

   Also known as a conversion cap, a valuation cap is designed to set the threshold for the convertible note so that an investor can own a larger stake of your company. It can help convince investors to pursue your company at its early stages and steer it toward success.

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7. www.starttech.vc · blog · 2020What's a valuation cap and why do you need it - Starttech ...

   www.starttech.vc · blog · 2020

   

   Nov 18, 2020 · What is a valuation cap? A Valuation cap or Conversion cap (in case we’re dealing with convertible notes) is a kind of ceiling; one that is imposed on the price at which the convertible notes or SAFEs will become equity in the future.

8. www.forbes.com · councils · theyecThe Six Factors For Determining A Fair Valuation Cap ... - Forbes

   www.forbes.com · councils · theyec

   

   Dec 1, 2022 · Determining the amount of the valuation cap is more of an art than a science, but there are typically six key factors—let's take a look at them. 1. The Overall Fundraising Market. The first ...

9. www.contractscounsel.com · b · valuation-capValuation Cap: Everything You Need to Know - Contract Lawyers

   www.contractscounsel.com · b · valuation-cap

   

   What Is a Valuation Cap? A valuation or conversion cap is put on the price at which convertible notes or SAFEs will convert to equity in the future (if we're dealing with convertible notes). The lower end of a valuation cap, or the price in subsequent funding rounds, gives holders of SAFE or convertible notes the option to convert their ...

10. www.sturppy.com · startup-dictionary · valuation-capValuation Cap: What they are & why they matter - sturppy.com

    www.sturppy.com · startup-dictionary · valuation-cap

    

    A valuation cap is a predetermined upper limit on what the startup’s stock could be worth at conversion. This means that if the company's valuation exceeds this predetermined upper limit, then the investor will receive shares at this predetermined value rather than at the higher value.