SAFEs Are Now Used Between Priced Rounds More Often

SAFEs - great for first money in, but not used after you raise a real VC round...right?

Turns out both seed-stage and Series A companies are increasingly turning to SAFEs for some intra-round financing.

Note that when we say "seed" here, we're talking about your first priced equity round.

While the total company figures are not gigantic, the change over time is substantial.

In Q1 2020, 45 seed-stage companies on Carta raised money on SAFEs 𝗮𝗳𝘁𝗲𝗿 their seed round. In Q4 2022, that number was 338 companies (650% increase).

In Series A, we see a similar pattern. 16 companies raised a SAFE 𝗮𝗳𝘁𝗲𝗿 their Series A in Q1 2020. 147 did so in Q4 2022.

Kinda fascinated by the fact that this trend was surging during the height of the VC boom. Perhaps we can chalk it up to excitement around all these young companies in the last 2 years.

But my natural inclination is that raising on convertible instruments like SAFEs would be a place founders would turn to right now, given the difficulty in raising priced rounds. Will need to look at Q1 data out soon to see if the trend holds (or if investor chilliness extends to these financing routes as well).

Speaking of - State of Private Markets Q1 2023 out on Tuesday.

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#cartadata #SAFEs #pricedrounds #venturecapital #startups #fundraising