The rise of convertible notes in venture funding, largely due to Y Combinator's influence, has changed how early-stage companies raise capital.

A convertible note is a financial instrument where an investor provides money to a startup, which is treated as a debt-like instrument with specific terms that need careful review.

In the mid to late 2000s, more capital became available for early-stage startups, making it easier to start a company.

Using convertible securities can lead to a larger number of investors in a startup, which can complicate administrative processes when seeking consent for future financing rounds.

The introduction of the SAFE (Simple Agreement for Future Equity) in 2014 marked a return to convertible structures, allowing startups to raise funds without the complications of debt.

Three major changes in startup financing over the years are the structure of fundraising documents, easier access to these documents online, and a greater focus on minimizing the time spent on fundraising.

Investors in convertible securities may write smaller checks and might not be as engaged as those who invest in priced rounds, which can affect the level of support and attention they provide to the startup.

Investing in a startup through a SAFE, convertible note, or equity will yield similar returns if the startup is successful, as seen with Airbnb's valuation growth.

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.