Valuation Cap is a pre-traded amount that is used to „cap“ the conversion price. Without a valuation limit, the conversion price at which a SAFE is converted into preferred shares is that of preferred shares in equity financing (with or without discount, depending on the choice you make in the Zegal app). In the case of a cap, the conversion price is determined by the Valuation Cap, regardless of the equity financing price. Our first vault was a „pre-money“ vault, because at the time of its launch, startups raised small amounts of money before launching a cheap funding round (typically a round of Serie A preferred shares). The safe was an easy and quick way to get the first money in the business, and the concept was that safe owners were just early investors in this future price cycle. As the Securities and Exchange Commission (SEC) states in a new Investor Bulletin, a SAFE offering, whatever its name, cannot be „simple“ or „safe.“ The addition of convertible bonds in the definition of the capitalization of post-money companies increases the denominator of this simple problem of division. And for a broader denominator, the lower the ratio, that is, the price per share. With the low price per share, the SAFE investor receives more shares for his money. And the more shares they receive, the more dilution is caused to the property of other shareholders. Unlike a convertible bond, a Simple Agreement for Future Equity (SAFE) is not remunerated, does not expire and does not set a minimum amount of funds to be borrowed for equity financing. .