Compare the dilution, cost, and timeline of raising via SAFE notes versus a priced equity round. See what founders at your stage typically choose.
For priced round; used as default SAFE conversion price
Defaults to pre-money if empty
A SAFE (Simple Agreement for Future Equity) is a fundraising instrument created by Y Combinator. It lets a startup raise money without setting a valuation. Instead, the investor gets the right to convert their investment into equity at a future priced round, usually at a discount or valuation cap.
SAFEs are most common at pre-seed and seed stages when valuation is hard to determine. Priced rounds become more common at Series A and later when the company has enough traction to support a valuation. SAFEs are faster and cheaper to execute.
A valuation cap is the maximum valuation at which the SAFE will convert to equity. If the next round valuation is higher than the cap, SAFE holders convert at the cap (getting more shares for their money). The cap effectively sets a ceiling on the price SAFE holders pay.
A typical priced round costs $15,000-$40,000 in legal fees for the company ($5K-$15K for the investor side). SAFEs typically cost $0-$2,000 since they use standardized documents with minimal negotiation.