Uncapped Round
Content
Definition
An Uncapped Round is a funding round without a predetermined valuation cap, allowing investors to fund a startup without limiting their potential equity stake.
Usage and Context
An uncapped round lets investors fund a startup without a limit on their possible ownership.
Frequently asked questions
- What does "uncapped valuation" mean? Uncapped valuation means there’s no limit on the value at which a convertible note will turn into equity.
- What is the difference between uncapped and capped SAFE? The difference between uncapped and capped SAFE (Simple Agreement for Future Equity) is that a capped SAFE has a maximum valuation for conversion into equity, protecting early investors from excessive dilution, while an uncapped SAFE does not.
- What does "no valuation cap" mean? "No valuation cap" means there’s no limit on the valuation for a convertible note to turn into equity, which can dilute early investors more if the company’s value rises significantly.
Benefits
An uncapped round provides unlimited funding potential, attracting investors with different stakes.
Conclusion
An uncapped round attracts a variety of investors by removing limits on potential equity stakes.
