SAFE Note Calculation Example Suppose an early-stage AI startup is raising a $1 million seed round from venture investors using SAFE notes with a $10 million valuation cap and 20% discount rate. One of the investors, an angel investor, contributes $500k via a SAFE note — for which, the...
Depending on the valuation cap and discount rate, the conversion terms may be significantly better than those offered to later investors. SAFEs offer founders: Quicker access to financing. Compared to equity financings, SAFE roundsdon’t require lengthy negotiations, documentation, or the need to ...
There are four main types of SAFE: (1) valuation cap, (2) discount, (3) valuation cap + discount, and (4) most favored nation (MFN). They are defined by how you calculate the amount of equity received by the SAFE holder(s) upon conversion. The SAFE holders’ investment amount is d...
Some people recommend convertible notes instead of SAFE notes and believe that SAFE notes are not as simple or inexpensive as they appear. For example, there could be an instance in which after the SAFE note is signed and a valuation cap discount is arranged, another investor offers a larger...
Discount, no cap:Has no cap and contains a discount when the note converts. Cap and discount:Has both a valuation cap and a discount. MFN, no cap, no discount:Has no cap, no discount, but does contain the most favored nation principle. When the SAFE note converts to equity, the fun...
Be prepared for potentially challenging negotiations in later rounds due to deferred valuation decisions. Be aware of how multiple SAFEs can dilute your equity. Regularly update and review your cap table, especially after each round of SAFE notes, to keep track of potential ownership changes. ...
Current Price $15.70 NYSE: EPR EPR Properties Market Cap $4B Current Price $48.32 Premium Investing Services Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. ...
Now, the two most important things about safe notes when it comes to the structure and the terms are either there is a cap, meaning you’re already establishing a valuation where they’re not going to go over when that conversion happens. Or, perhaps, the discount that you’re providing ...
The first version of Y Combinator’s SAFE was similar in its key terms to a SeedFAST in that the SAFE converts as if it’s just another investment in the round, at the same valuation as the other investments in that round (plus any discount or valuation cap that you gave you...
they can be adapted for use in later funding rounds. The key is to tailor the SAFE terms to suit the more mature stage of the company by adjusting the valuation cap and discount rate to reflect the company’s growth and