America Destroys Its Advantage
April 29, 2025
For decades American Universities have been the envy of the World. With the brightest minds and the best facilities, these globally recognized institutions acted as a magnet for talent everywhere.
Today, we’re talking about being oversubscribed on a post-money cap.
If you’re raising your round on a SAFE with a post-money cap and you get oversubscribed, you have to increase your valuation. I don’t care who you promised or how much you want to be polite. You don’t really have a choice.
Each new dollar at the current post-money, will lower your pre-money valuation. Lowering your pre-money valuation reduces the equity value for your current employees and equity is a big part of their compensation!
Tell the investor you’re sorry, there’s overwhelming demand and others signed first. Offer them a slightly higher valuation or a small discount on the next round but don’t make your team members take the hit because you’re afraid of irritating an investor.
