A Founder's Guide to Notes & SAFEs: Caps, Discounts & More | Dose 036

Raising early-stage funding? Learn the ins and outs of convertible notes and SAFEs. Book office hours with Dreamit Ventures ► https://www.dreamit.com/office-hours Tell us more about your startup ► https://www.dreamit.com/tell-us-more In this Dreamit Dose, Steve Barsh, Managing Partner at Dreamit, gives you his breakdown and issues to avoid on early-stage financing instruments. How do SAFE notes work? What are the pros and cons of convertible notes? Convertible note caps? We’ll answer those questions and more as we dive into the terms of terms sheets. In part, this Dose is related to understanding your term. We’ll touch on SAFE terms, convertible note terms, valuation cap, discount rate convertible notes, uncapped notes, and much more. There are certainly differences between a convertible note vs SAFE vs equity priced round. If you don’t know the pros and cons of SAFE notes or can’t adequately answer what is a valuation cap (or even what is a SAFE note), we’ll give you the breakdown on SAFEs, convertible notes, equity, and startup funding explained. Check out other related Dreamit Dose fundraising videos below. That’s the ins and outs of early-stage financial instruments in a short 10-minute Dose! 00:00 - Intro 00:31 - What Are Convertible Notes and SAFEs 02:23 - Valuation Caps and Conversion 03:56 - Uncapped Notes 06:11 - Setting Your Cap 07:01 - Examples When Caps Don’t Apply 08:50 - Takeaways 09:48 - Outro