Business Pitch Dictionary by pitch.dog
Term-sheet economics · Working

Return cap

Also called: participation cap

ELI5

A maximum amount an investor can receive under a feature.

Used in conversation

“The return cap reduces the participating preference's effect.”

Definition

A limit on the return or participation available to a security holder under specified terms.

Here “Return cap” means: A limit on the return or participation available to a security holder under specified terms.

Pitch context

You will see “Return cap” in fundraising decks, data rooms, term sheets and investor conversations when the discussion reaches term-sheet economics.

Why it matters: In term-sheet economics, a loose definition can change rights, obligations, approval, disclosure or enforceability.

Caution

Meaning, enforceability and required process vary by jurisdiction and agreement; this definition is not legal advice.

Connected terms

Sources & evidence · 5

Direct term-level sources and supporting source families.