Hey founders - some of you are stacking far too many SAFEs.
1 SAFE round at 1 valuation cap = great, love it.
2 valuations caps = good if there's a distinct jump as the company progresses. Say an angel at $5M post-money valuation cap and a pre-seed at $8M.
3 valuations caps = okay if you did a tranches within a round or went angel / pre-seed / seed all on SAFEs.
But 4? or 5? or upwards of 8? That's too many caps.
224 companies on Carta have raised SAFEs at 5+ different valuation caps in the last year, all before priced funding.
We have 2 startups on the platform that have raised at 20 different valuation caps.
SAFEs are a great instrument for their original purpose, which is to streamline investment into early companies by deciding not to decide on company valuation.
But stacking too many SAFEs is anti-dilutive for the founder and can make progress difficult to track for the investor.
One or two SAFE rounds, then up to the standard world of priced equity. Your cap table will thank you later!
#startups #SAFEs #valuationcaps #founders
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