Back in yesteryear (circa 2016), startup founders would maybe do a small angel round using the SAFE and then quickly jump on the priced equity track.
Those days are long gone.
In the current market, the SAFE is the preferred financing mechanism for essentially all rounds that raise under $3 million. There is an estuary where SAFE meets priced from $2M-$3M raised which I think reflects investor preference more than anything else.
SAFE rounds that raise under $1 million do so without side letters, by and large. But the bigger SAFE rounds are now accompanied by side letters in the majority of cases. Founders, read those carefully! MFN, pro rata, information rights - these are important terms to be aware of, if not negotiated.
Interesting to note we are 10 years on from the beginning of the SAFE era…I wonder if there's another financing innovation on the horizon?
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Peter Walker
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