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Video series: How SAFEs and convertible notes work

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Weighing fundraising options as a startup founder can be overwhelming, especially when you’re trying to decide between different fundraising instruments like SAFEs and convertible notes.

In this three-part video series, we give a detailed breakdown of the differences between SAFEs and convertible notes, as well as the potential advantages and disadvantages of each.

Part 1: How SAFEs and convertible notes work

In the first episode, we provide an overview of how SAFEs and convertible notes work, as well as the high-level pros and cons of each.

Part 2: Valuation caps and conversion discounts

Now that we understand the main differences between SAFEs and convertible notes, we dig a little bit deeper to understand the specific pieces of each. We discuss how valuation caps and conversion discounts work, and learn how they incentivize investors to risk their money on your company at such an early stage.

Part 3: The difference between pre-money and post-money SAFEs

If you’re fundraising on a SAFE, your investors might have a preference about the valuation cap—will it be calculated on a pre-money basis, or a post-money basis? In episode 3, we explain the differences between each, and why it matters to your ownership dilution over time.

 

At Carta, we help startups with fundraising, compensation, valuations, equity management and much more. Talk to us to find out how we can help you grow.

 

DISCLOSURE: This communication is on behalf of eShares Inc., d/b/a Carta Inc. (“Carta”). This communication is for informational purposes only, and contains general information only. Carta is not, by means of this communication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein. ©2021 eShares, Inc. d/b/a Carta, Inc. (“Carta”). All rights reserved. Reproduction prohibited.

Josh Durst-Weisman

Josh works in marketing and sales at Carta. Prior to tech, he spent several years in Los Angeles as a TV producer and writer of bad horror movies.

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eShares, Inc. DBA Carta, Inc. is registered with the U.S. Securities and Exchange Commission. The services and information described in this communication are provided to you “as is” and “as available” without warranties of any kind, expressed, implied or otherwise, including but not limited to all warranties of merchantability, fitness for a particular purpose, or non-infringement. Neither eShares, Inc. DBA Carta, Inc. nor any of its affiliates will be liable for any damages, including without limitation direct, indirect, special, punitive or consequential damages, caused in any way or arising from the use of the services or reliance upon the information provided in this communication or in connection with any failure of performance, error, omission, interruption, defect, delay in operation or transmission, computer virus or line or system failure. Carta Securities LLC is a broker-dealer and a member of FINRA and SIPC. Contact: eShares, Inc. DBA Carta, Inc., 333 Bush Street, Floor 23, Ste. 2300, San Francisco, CA 94104.