The key insight this week
I had a few cold chills this week - the kind of shivers you get when you worry you've been saying the wrong thing to a multitude of people.
Having looked into this dynamic a number of times, I was certain that the SAFE had dethroned the convertible note across pre-seed investing. After all, nearly 80% of investment into pre-seed companies came through the SAFE route!
But a number of polite and supportive readers expressed some doubts. Is the SAFE is really the default? Everywhere, for everything?
So back to the lab. And as the graphic above shows, you all were right to question!
SAFEs occupy the top spot for pre-seed investment primarily on the back of their adoption within standard SaaS tech startups. But the convertible note remains a major part of many industry conversations, in particular Medical Devices, Hardware, and Biotech.
(I know it says 40% on the Gaming bar above as well, but that's actually more like 19% if I had removed a major outlier round).
The other potential confounding factor in this analysis is, of course, location. And it's true that SAFEs are more highly adopted within Silicon Valley and New York than, say, Boise. But the industry distinctions seem to be more impactful on this one than the geographic.
Short plug for any founders raising right now - you can model your SAFE or note round using a free calculator from Carta. Get an estimate on your future ownership in 1 minute or less.
Feedback is genuinely appreciated here - so don't hesitate when I visualize something that seems a bit off from your vantage point. I might just be wrong.
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Peter Walker
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