Discount or cap? A spreadsheet that shows what happens when a note converts.

"..conversion price will be the lower of (i) the price per share determined by applying the discount to the Series A price per share; and (ii) the price per share determined by dividing the cap by the Series A pre-money valuation."

But this doesn't mean "if the valuation hits the cap, the discount does not apply" because even if the valuation is higher than the cap, the discount may still be more beneficial. So there is a gray area. If you change cell C19 to $3,500,000, for example, you'll see that the discount still applies, and not the cap.