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.

Investors should model their SAFE conversions to understand the implications of multiple SAFEs with different valuations and discounts, as this can complicate ownership stakes.

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.

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.

Understanding the mechanics of dilution and cap tables is essential for founders to navigate the fundraising process effectively. I hope this will not be anything new to you as we discuss raising money on post-money SAFEs and what happens as you hire people and issue equity to employees.

Many founders are shocked when investors agree to simple terms like signing a SAFE without demanding board seats or pro-rata rights, which contrasts sharply with their previous experiences.

Founders should be cautious about how much they raise on SAFEs, as it dilutes their ownership in the company.

Founders should avoid negotiating too hard on SAFE caps, as setting them too high can lead to selling more of the company than anticipated during a priced round.

Many founders mistakenly believe that fundraising is about more than just raising money to build a successful company, which can lead to misalignment with investor expectations.