7 terms
Price & valuation
What you are paying per share, and the surprisingly large number of ways a headline valuation can mislead you.
Valuation cap
Cap
The maximum valuation at which your SAFE or convertible note will convert into shares, no matter how high the company's next round is priced.
Read the term →Discount rate
Conversion discount
A percentage reduction — typically 10% to 25% — applied to the price per share of the next priced round when your SAFE or note converts.
Read the term →Pre-money vs post-money
Pre-money is what the company is agreed to be worth before the new investment lands; post-money is that figure plus the money raised — and your ownership is always calculated on the post-money number.
Read the term →Post-money SAFE
The current standard SAFE, in which the valuation cap is a post-money figure — so your percentage of the company is fixed at signing and cannot be diluted by other SAFEs issued afterwards.
Read the term →Most favoured nation clause
MFN · Most favored nation
A provision entitling you to adopt the better terms of any subsequent convertible instrument the company issues before your own converts.
Read the term →Down round
A financing priced below the company's previous round, which dilutes existing holders disproportionately and typically triggers anti-dilution adjustments in favour of earlier preferred investors.
Read the term →Bridge round
Bridge financing · Extension round
A short financing intended to carry a company from where it is to a larger round or to profitability, usually raised from existing investors on convertible paper.
Read the term →