Priced equity sets ownership terms now
In a simple priced round, a negotiated share price determines how many shares new investors receive. The actual agreement also sets economic and control rights. Preferences, option-pool increases and prior convertible instruments can make the final ownership calculation more complicated than dividing new money by the headline post-money value.
A SAFE is not a standard loan
Y Combinator’s standard SAFE is not debt and has no interest rate or maturity date. It provides rights defined by the document that can convert at a later financing or be treated differently at another triggering event. Caps, discounts, most-favored-nation provisions and side letters matter. A document called a SAFE can vary; read the actual agreement.
A convertible note includes debt terms
A convertible note generally has a principal amount, interest, maturity and conversion provisions. Ask what happens if there is no qualifying financing before maturity, how accrued interest converts and what repayment or extension rights exist. Those terms can change both the company’s cash obligations and future dilution.
Model instruments together
List every instrument’s amount, cap, discount, conversion trigger and associated rights. Test a lower, expected and higher next-round valuation, including any option-pool increase. A post-money SAFE cap should not be treated as a guarantee of ownership after all future money and pool changes. Have counsel and your cap-table administrator reconcile the model.
Put it into practice
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General education, not individualized investment, legal or tax advice. Rules, eligibility and product terms can change. Confirm the requirements for your company with qualified professionals.