What's a SAFE valuation cap?

It's the number one question I get whenever speaking with a group of early founders: what should the valuation cap be on my upcoming SAFE fundraise?

And I can see why it's hard to figure out! You've got angels in smaller markets insisting that anything above a $3M valuation cap is silly in today's market. You've got YC founders raising on $20M valuation caps as a matter of course.

Confusing.

So here's what the data tells us:

SAFE rounds that raise under $250K have a median valuation cap of $5M, with a healthy amount both above and below that figure. Personally a little apprehensive about the really large val caps at a small cash raise.

$250K-$500K? Median is $6M valuation cap.

$500K-$1M? Big bump up to a $10M median cap.

Beyond $1M, I'd say you're getting into "seed on SAFEs" territory (although I've heard that pre-seed may now extend up to $2M raised).

In any case - clear takeaway here is that there is no "right" answer. People tend to default to round numbers at this stage. I will caution founders that the trend of raising 3 or 4 or even 5 separate SAFE rounds (defined by SAFEs with different valuation caps) may seem like a great way to spend time building instead of fundraising.

But watch out for dilution!

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Peter Walker

Carta Insights