Have two angels interested, raising $200K total on SAFEs. We're pre-revenue, have an MVP with 200 beta users, no paying customers yet. B2B fintech space. Solo technical founder (me).
What cap is reasonable? I've seen everything from $2M to $20M online and I have no idea where I fall.
Rule of thumb: your cap should be 2-3x what you think your next priced round valuation will be. If you expect to raise a $2M seed at $8M valuation in 12 months, a $3-4M cap gives angels a good deal without being unfair to you.
That helps. What about the discount? Should I do cap only or cap + discount?
$4M cap = 5% sounds right. Going to propose that to the angels. Thanks for the framework sadly.
Slight disagreement with the "cap should be 2-3x your next round valuation" advice. That assumes you know what your next round will be, which you probably dont if youre pre-revenue lol.
I tell founders to focus on dilution math. What % are you comfortable giving up for this money? Work backwards from there. The cap is just a mechanism to get to that %.
The operating agreement is way more important than most people realize. It governs everything from profit distributions to what happens if a member dies or wants out. Don't skip it.