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KN
Kirsty Nathoo
10/17/18
@ Y Combinator
When raising money on SAFEs, the investor's ownership is calculated by dividing their investment amount by the post-money valuation or valuation cap.
Video
YC
Understanding SAFEs and Priced Equity Rounds by Kirsty Nathoo
@ Y Combinator
10/17/18
Related Takeaways
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
In both priced rounds and SAFEs, the formula for calculating post-money valuation is pre-money valuation plus the amount raised.
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
Founders need to be aware that their ownership percentage can decrease significantly due to dilution from SAFEs and new equity rounds, so they should plan accordingly for future fundraising. The percentage of ownership for SAFE investors is based on the valuation cap in the SAFE, and if the priced round valuation is higher than the cap, they convert at the cap, receiving more shares for the same investment than Series A investors.
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
When raising funds, it's advisable to use post-money SAFEs to simplify calculations and better track future dilution, even if pre-money SAFEs have been used in the past.
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
Don't over-optimize for valuation caps when raising money on SAFEs, as the difference in ownership percentages may not be significant, and the focus should be on making the company successful instead.
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
The introduction of post-money SAFEs simplifies understanding dilution by clarifying how much of the company founders have sold to investors after all SAFEs have converted.
KN
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.
YC
Y Combinator Cast
03/07/18
@ Y Combinator
Founders should be cautious about how much they raise on SAFEs, as it dilutes their ownership in the company.
KN
Kirsty Nathoo
10/17/18
@ Y Combinator
It's crucial for founders to understand their dilution when raising money through SAFEs or convertible notes, as they may end up owning significantly less of the company than expected after a priced round.
YC
Y Combinator Cast
03/07/18
@ Y Combinator
Investors should model their SAFE conversions to understand the implications of multiple SAFEs with different valuations and discounts, as this can complicate ownership stakes.