SAFEs feel painless when you sign them. No board seat. No valuation fight. Money in the bank in a week.
The bill arrives later. Every SAFE converts at your first priced round, at the same moment. A Series A investor sees the whole stack at once, and does the math you skipped.
How the stack builds
A friends round on one cap. An angel check on another. An accelerator deal with its own terms. Each one looked small. Together they can own a large share of the company before the new lead puts in a single dollar.
Then the lead asks for an option pool, created before their money comes in. That pool comes out of the founders too.
A simple illustration
These numbers are an example only. Run your own with your lawyer.
- You raise SAFEs that will convert into roughly 20% of the company.
- The Series A lead takes 20%.
- The lead asks for a 10% option pool, created pre money.
Founders who thought they would hold most of the company after the round can end up well below what they planned. A lead investor will price that founder position as a risk, because underowned founders leave.
What to do before you raise
- Model the conversion now. Build a pro forma cap table that converts every SAFE at a realistic Series A price. Look at founder ownership after the pool.
- Stop stacking. If you need bridge money, raise it on one instrument with one set of terms.
- Know your story for the table. The lead will ask why the early rounds happened. Have a clear answer tied to milestones you hit.
- Bring a lawyer early. Cleanup is cheaper before a term sheet than during one.
Where I come in
I do not give legal or tax advice. I help you build the round strategy and the investment case around the structure you have. In a 30 minute session we map your round, your ask and the story your cap table tells.