Venture Deals · glossary
A ceiling on the company value used to convert early money, not a price. Divided by the agreed share count, it gives the cap price. The angels’ €3,000,000 cap gave €500 a share at the Series A. Definition of Cap · Chapter 3
Explained in Chapter 3, SAFEs and Advance Subscriptions, of Venture Deals.
The valuation cap is a ceiling on the company value used to convert the money, not a price. Solaris's first priced round valued the company at €8,000,000, but the angels converted as if it were worth €3,000,000. Both figures are pre-money (the value before the new money goes in). The founders accepted a cap because it spared them agreeing a value at all.Read Chapter 3, SAFEs and Advance Subscriptions →
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in relation to an Advance Subscription, €3,000,000, and in relation to a Note, €6,000,000, in each case being the pre-money valuation by reference to which the price payable on conversion is calculated; and the price so given is that amount divided by 6,000, being the capitalisation of the Company immediately before Series A Completion agreed in the Term Sheet and set out in Part A of Schedule 2 (so that the price given by the Cap was €500 for the Advance Subscriptions and €1,000 for the Notes);Read the definition in the document →
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