Cap or discount calculator
Enter a SAFE with a cap and a discount. Move the round price and see which price the SAFE pays.
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Cap or discount: which price wins?
A SAFE with a cap and a discount converts at the lower of two prices. The company has 10,000,000 other shares before the round.
- Cap price
- $0.475
- $5M ÷ 10,526,316 shares
- Discount price
- $0.96
- $1.20 × 80%
- SAFE pays
- $0.475
- The cap wins
- SAFE gets
- 526,316
- 2.53x the shares at the round price
- Round price
- Cap price
- Discount price
At a $1.20 round price, the discount gives $0.96, but the cap gives $0.475. The SAFE converts at the cap price and gets 526,316 shares, 2.53 times what $250K buys at the round price.
The discount price and the cap price cross at $0.5937. With no new option pool, that is a pre-money valuation of $6.25M, the cap ÷ 80%. This round price is a pre-money valuation of about $12.63M.