Choose your valuation carefully; too high can scare off investors, while too low can lead to excessive dilution. The goal is to get the money in the bank and get back to work. Don't over-optimize your fundraising process; focus on the essentials instead.

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.

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.

Valuation refers to the estimated worth of a startup based on the last investment round, but it doesn't guarantee a liquid market like in public companies, making it more of a measure of perceived value.

Dilution occurs when you sell a percentage of your company, reducing your ownership stake; for example, selling 20% of your company means you own 20% less afterwards.

There are many terms in a funding deal that can negatively impact you, regardless of how high the valuation is.

Convertible notes complicate the understanding of dilution because you haven't actually sold equity yet, making it hard to determine the real dilution impact until later funding rounds.

The only key term to negotiate in a SAFE is the valuation, which affects how it converts and the dilution involved.

You should care just as much about the terms of your fundraise as you do about the valuation and the amount of money you raise.