Patent Attorney and Founder
A long way of going about it what i’m trying to say is the valuation cap essentially gives the investors an even bigger price break than the discount rate and when you’re negotiating with investors you will find that one terms that they are going to be that’s going to be header shaded is going to be that valuation cap because when the save converts it converts at the price it either converts at the discount or the valuation cap not both it’s going to convert at the one which gives the investor the the bigger bang for their buck and nine times out of ten that’s going to be the valuation cap they’re going to get more of a discount with it converting at the valuation cap so to those entrepreneurs and startups out there who are thinking about raising a safe round or who may be in the middle of raising a safe round right now it’s important to note that dynamic when it comes to the valuation cap you’re going to want it set as high as possible within reason right you can’t just throw out a random number there it has to be backed up you have to do your research and see what other companies have raised that are in your industry et cetera et cetera because you know if you just throw out a random number there i’m on it as high as possible within a reasonable range whereas the investors want it as low as possible