Valuation cap
In accounting, valuation cap means the highest valuation a SAFE or note converts at. On YC's post-money SAFE the Safe Price is the cap ÷ Company Capitalization, and the holder takes whichever of that or the round price issues more shares.
Authority: YC post-money SAFE (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- Cap tableWays to raise: SAFEs, notes, priced rounds, debt and grants › Post-money SAFE mathThe Safe Price, Company Capitalization and conversion shares, worked on Northwind's $250,000 SAFE.6 min
- Cap tableSAFE conversion and dilution, worked end to end › SAFE versus note at conversionThe same money and cap as a SAFE and as a note, converted at Northwind's Seed.4 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- valuation
- price
Nearby in the catalog
No component names this concept outright. These sit in the same part of the system.
2Cards
Family specAlso in Equity & financing
Defined in Lexicon. This page is generated from that document, so the two can't disagree.