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.
