Valuation Cap
The maximum company valuation at which a SAFE or convertible note converts into equity — protecting early investors from paying a much higher price later for the same risk they took early.
Quick Answer
What happens if my company is valued far above the cap at the next round?
The SAFE still converts as if the company were valued at the cap, not the higher actual valuation — meaning the early investor gets meaningfully more ownership per dollar than a new investor joining at the real price.
- The cap protects the investor, not the founder, by design
- A big valuation jump makes early caps very favorable to holders
- Model conversion at the cap before assuming a specific ownership number
The Lovie Advantage
Lovie models every outstanding SAFE's conversion at its own cap against your actual round price, not a rough approximation.
See how this connects to Preferred Stock. For the formal definition, see Investor.gov's glossary entry on going private.
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