Tools

Explore

Videos Channels Figures

Atmrix

Tools

Explore

Videos Channels Figures

Atmrix

KN

Kirsty Nathoo

04/28/17

@ Y Combinator

In a non-priced round, investors often have a valuation cap that sets an upper limit on the company's valuation for future share conversions, rewarding early investors with more shares if the company grows significantly.

Video

Legal and Accounting Basics for Startups with Kirsty Nathoo and Carolynn Levy (HtSaS 2014: 18)

@ Y Combinator

Legal and Accounting Basics for Startups with Kirsty Nathoo and Carolynn Levy (HtSaS 2014: 18)

04/28/17

Related Takeaways

Kirsty Nathoo

03/07/18

@ Y Combinator

In a priced round, the SAFE converts into shares based on the pre-money valuation, which includes the increased options pool.

Kirsty Nathoo

03/07/18

@ Y Combinator

The SAFE investor's shares are calculated based on the conversion price, which is determined by the valuation cap if it's lower than the priced round valuation.

Kirsty Nathoo

10/17/18

@ Y Combinator

In rare cases where the priced round valuation is lower than the SAFE cap, SAFE investors may receive a better deal, converting at the lower price of the Series A round.

Carolynn Levy

09/20/19

@ Y Combinator

While priced rounds are still a common method for raising funds, they typically occur later in a startup's lifecycle, often after initial fundraising through SAFEs or convertible notes.

Kirsty Nathoo

10/17/18

@ Y Combinator

The lead investor in a priced round typically negotiates the creation of an option pool for new employees, which can dilute existing shareholders but not the new money being invested.

Michael Seibel

12/17/21

@ Y Combinator

Investors know that founders want high valuations and often leverage this by offering a desired valuation while asking for unfavorable terms.

Kirsty Nathoo

10/17/18

@ Y Combinator

In a priced round, the SAFEs convert into shares, and the option pool is often increased to accommodate new hires, which can dilute existing shareholders.

Carolynn Levy

09/20/19

@ Y Combinator

If a company never raises a priced round, the SAFE only converts if the company is sold or goes public, which is a rare scenario.

Sam Altman

05/02/17

@ Y Combinator

FF stock allows founders to sell shares in later rounds without affecting common stock valuation. It's advisable to set this up after initial success rather than too early.