Hey folks - we're overusing SAFEs.
I get it, they're quick. And convenient. And simpler (legal-wise...although not on the backend when they convert).
But I'm not sure it's good for venture startups overall to have SAFEs take more than 50% of all rounds that raise $4M or less.
I think SAFEs are a great concept as originally constructed. Give the founder cash today for the promise of future equity because valuing a 6-month old business is a fools errand anyway.
And they've evolved with side letters and other constrictions that benefit the investor over time.
But let's raise some priced equity rounds already! $5M, $10M, $20M, all on SAFEs. 2 or 3 or heck we've seen 8 different valuation caps before the first conversion.
My number one pet peeve is the stacking. So many founders have no idea what they’ve sold.
It's all messy. Give me a clean priced round any day, especially if I'm raising real capital.
Rant over, but more data on pre-seed for anyone interested in our State of Pre-Seed, Q1 2026 report: https://lnkd.in/guyw9UTE
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