SAFE vs Convertible Note: What They Are and Which to Use
Convertible notes vs. SAFEs: how each works, key differences in terms and mechanics, and which instrument makes more sense for your early-stage startup funding.
Convertible notes vs. SAFEs: how each works, key differences in terms and mechanics, and which instrument makes more sense for your early-stage startup funding.
What a convertible note is for startups: debt now that converts to equity later—principal, interest, maturity, valuation cap, discount, conversion math, securities-law basics, and tax/QSBS timing.
SAFEs are widely used in U.S. pre-seed and seed financings, but “simple” does not mean uncomplicated. Learn how a SAFE works as a security and contractual right, what conversion and payout terms do, and what to model before you sign.