Topic: Do Convertible Notes and SAFEs both include valuation caps and discount rates?

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Do Convertible Notes and SAFEs both include valuation caps and discount rates?

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Yes. In the Convertible Note vs SAFE comparison, both agreements commonly include valuation caps and discount rates. A valuation cap limits the company valuation used when converting the investment into equity, while a discount rate allows early investors to purchase shares at a lower price than future investors. These provisions reward investors for supporting startups during their earliest stages.



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