Instruments
Instruments
The paper a round is written on decides who owns what afterwards. Each page works through the conversion arithmetic with real numbers, using the same engine as the calculators.
Instrument The post-money SAFE
The standard instrument for early rounds in the U.S. Its cap is a post-money valuation, so the ownership you sell is simply the amount divided by the cap.
Instrument The pre-money SAFE
The original 2013 SAFE. Its cap is a pre-money valuation, and the ownership it buys depends on how much else is raised and on the next round's option pool.
Instrument Convertible notes
A loan that is meant to turn into shares. Interest and a maturity date make it behave differently from a SAFE, especially when the next round is late.
Instrument Priced equity rounds
In a priced round investors buy newly issued preferred shares at a set price per share. Everything else in the round flows from how that price is calculated.
Instrument SAFE vs convertible note
Both defer the valuation to a later priced round. The differences are interest, maturity and seniority, and the way the cap is measured.