A cap in fundraising refers to a limit or maximum amount that a company or organization is seeking to raise from investors. This limit is often set by the company or organization as part of its fundraising strategy and is used to control the amount of funding that is raised and the number of investors that are involved.
For example, a company might set a cap of $10 million for its fundraising round, meaning that it will not accept more than $10 million in investment, even if it receives more interest from investors.
This can be beneficial for the company, as it allows them to raise the amount of capital, they need without diluting their ownership or control of the company.
Caps can also be used in crowdfunding campaigns, such as in Kickstarter or Indiegogo, where a campaign will have a set fundraising goal and will only accept funding if the goal is met.
Caps can also be set in the form of a "hard cap" or "soft cap". A hard cap refers to a strict and unchangeable limit of the funds that can be raised, while a soft cap refers to a minimum target that the company or organization aims to reach but can go over if there's more interest and investment.
In some cases, companies may also set a "valuation cap" which limits the maximum valuation of the company that investors can invest in. This can be useful for companies that want to prevent their valuation from becoming too high and becoming overvalued.