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SAFEs are simple until the cap table is not

Cheap and fast at signing. The complexity arrives at conversion.

A SAFE avoids negotiating a valuation, which is why early rounds use them. Nobody argues about what the company is worth because the question is deferred.

It is deferred, not removed. Stacked SAFEs with different caps and discounts all convert at the priced round, and founders regularly discover they have sold more of the company than they thought.

Model the conversion before signing the next one. If the combined dilution is beyond what you intended, a priced round now may be cheaper than three more SAFEs.

This note is general information, not legal advice, and it does not create an attorney-client relationship. Whether any of it applies to your situation depends on facts this article does not know.

See our corporate practice

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Corporate Delaware, or your home state The default answer is not always the right one, and it costs money either way. Corporate Vesting protects the founders who stay It is usually mistaken for a term investors impose. It is mainly a term co-founders need. Corporate The formalities exist to protect you personally Limited liability is a benefit you can lose by ignoring the paperwork.

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