Since I first joined Carta two years ago, I’ve been intrigued by the potential of our platform to empower—and make life easier for—the founders, investors, and lawyers who rely on Carta every day.
One aspect of our ecosystem with clear room for improvement was SAFE financings. While we believe in the convenience and efficiency of SAFEs, we were aware of a number of widespread issues we could solve, including:
Many founders do not fully understand how their SAFE terms could impact them, particularly in terms of future dilution upon conversion. It’s important to understand how aspects like using pre-money vs. post-money forms of SAFEs, and giving valuation caps and conversion discounts, can affect the founders months later. Founders need more visibility and control up front.
SAFE rounds are often run by founders outside of the purview of their lawyers, which can lead to mistakes in filling out documents. For example, a number of founders reading terms too quickly have given away 80% discounts when their intent was 20%. (Note: “Discount Rate,” a common term in SAFE docs, is often defined as 100% minus the intended discount.)
Records for SAFE financings end up strewn across multiple systems, including inboxes, e-signature services, cloud storage folders, and local drives. As a result, it’s common for individual SAFEs to be lost or forgotten in the conversion process, leading to expensive cleanup, and even rounds being re-priced.
SAFEs are not always reliably logged in the company’s Carta account, exacerbating the issues above and frustrating counsel and early investors.
Beyond all this, founders waste precious time and energy fumbling with Word documents and e-signature blocks when they want to be doing the work of building their company.
So we asked, what if we could help founders create and issue a SAFE in 30 seconds? No room for mistakes, no Word docs, no manual entries to their cap table, no sending wire instructions, no extra email volume. And what if we could put founders in control of future dilution before they issue their very first SAFE?
As of today, we’ve delivered on both. If you’re interested in raising SAFEs, you can project their future impact on your ownership in seconds, with just a few inputs. When you feel comfortable with the terms you want, you can now generate and issue that SAFE in just a few seconds in Carta. Select the form you want to use (both Carta and YC forms are available), fill in your conversion discount, valuation cap, investment amount, investor info, and off you go. You and your investor sign directly in Carta, your investor can view wire instructions, the company confirms receipt of funds, and the SAFE is instantly logged in both your Carta cap table and your investor’s Carta portfolio. That’s it—funded and done, with no clerical work. (If you’re working with outside counsel, they will receive notifications on your progress and have visibility along the way.)
As an additional benefit for our community, we’ve also created the Carta SAFE, which we think provides the most comprehensive SAFE forms available on the market. The main goal of the Carta SAFE is to provide easy-to-read, digestible forms for founders as well as help avoid historical pitfalls we’ve seen with other forms available in the market. The default form available on Carta will be the Carta Pre-Money SAFE, with the ability to select Post-Money Carta or YC forms if you like.
Founders who issued SAFEs during this product’s beta have given rave reviews, with one remarking, “This seems magical.” We hope you think so, too.
DISCLOSURE: This publication contains general information only and eShares, Inc. dba Carta, Inc. (“Carta”) is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services nor should it be used as a basis for any decision or action that may affect your business or interests. Before making any decision or taking any action that may affect your business or interests, you should consult a qualified professional advisor. This communication is not intended as a recommendation, offer or solicitation for the purchase or sale of any security. Carta does not assume any liability for reliance on the information provided herein.