SAFEs

Key takeaways

• Choose pre- vs post-money structure intentionally; affects dilution
• Caps and discounts are the primary economic levers
• Keep docs simple at pre-seed for speed

Basics

SAFEs convert into equity later, typically at the next priced round.

• SAFE is not debt and has no interest or maturity.
• Pre-money vs post-money impacts dilution math.
• Two main levers: valuation cap and discount.

Key terms

• Cap: upper bound on conversion price. Typical pre-seed ranges depend on traction.
• Discount: percentage reduction vs priced round. Often 10–20%.
• MFN: later investor improvements may flow back to earlier investors.

By stage

• Angel / Pre-Seed: keep docs simple; cap aligned with evidence.
• Seed: tighter caps; may add MFN or side letters.

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