Founders: fundraising on SAFEs can be simple and fast, but it is not free.
Yes, you get money upfront. And yes, your investor gets nothing but a promise of equity in the future (should you get to a priced round).
But you're still selling equity for cash!
Here's how much of your company you should expect to sell for a given dollar amount. All data from 16,000+ SAFEs signed in 2024 by US companies on Carta.
𝗔𝗻𝗴𝗲𝗹 𝗥𝗼𝘂𝗻𝗱𝘀
If you raise less than $250K, you'll sell 3% (median dilution).
Between $250K-$499K, the median sold is 7.9%
𝗣𝗿𝗲-𝗦𝗲𝗲𝗱 𝗥𝗼𝘂𝗻𝗱𝘀
Raise $500K-$999K, median dilution is 11.9%
Raise $1M-$2.4M, median dilution jumps to 17.2%
𝗦𝗲𝗲𝗱 𝗼𝗻 𝗦𝗔𝗙𝗘𝘀 (𝗼𝗿 𝗮𝗯𝗼𝘃𝗲)
$2.5M-$4.9M raised = 21.8% median sold
$5M+ raised, you'll sell 22.9% of the company on a median basis
𝗡𝗼𝘁𝗲𝘀
The ranges in a SAFE round are quite wide. Sometimes $1M in capital costs the founder 10% in equity, and sometimes it's 15%. This disparity is mostly due to the investment being predicated on the founding team themselves rather than the progress of the business.
Yes, having traction matters when raising on SAFEs - but the VC or angel is still mostly just betting on the founders. So repeat, "credible" founders get much better deals.
Many startups are now stacking SAFEs - signing multiple SAFEs at different valuation caps over time. That can work, but just know that if they are all post-money SAFEs then the investors are getting anti-dilution on their capital effectively without negotiating for it. Don't be afraid of priced equity!
Share with a fundraising founder. And if you want to learn more about how much 𝗲𝗾𝘂𝗶𝘁𝘆 𝗳𝗼𝘂𝗻𝗱𝗶𝗻𝗴 𝘁𝗲𝗮𝗺𝘀 own at every stage, subscribe at the link in graphic for our Founder Ownership report - due out tomorrow.
#startups #founders #SAFEs #fundraising #preseed
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