Valuation
What is Discount Rate?
A percentage discount a SAFE or convertible note gets on the next round's price-per-share - typically 10-25%.
A discount rate gives the early investor a price-per-share lower than the new round investors. A 20% discount means the SAFE holder pays 80¢ per share where the new investor pays $1. The SAFE or note converts at the better of cap OR discount - never both. Discount is most useful when there's no cap or when the cap is high relative to the round's actual valuation.