Why are startups raising pre/seed rounds of $2M+ with notes/SAFEs? That's not what they were intended for...
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I thought
@ycombinator@paulg created the SAFE so they could easily spray/pray each batch with $150k very early and then let investors price it after demo day. Just bc YC does it doesn’t mean that’s how it should be done.
Carolynn Levy created the SAFE. It was not designed for YC to use. It was simply meant to be a better convertible note. She is also the main person who switched SV to notes. The reason she did that was so that startups could do rolling closes.
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YC for its part does a priced round. If you stop to think about it, it has to, since it invests a fixed amount of money for a fixed amount of stock.
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Co-sign
Hats off to Carolynn - YC SAFE took a tremendous weight off my shoulders in facilitating my first round rolling raise.Thanks. Twitter will use this to make your timeline better. UndoUndo
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What do you think about updating the SAFE to convert to common shares instead of preferred?
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Why? Bc of the liquidation overhang? We just invested in a note that converted to common to deal with that. Financially in the end, it’s all the same but downside protection during is less and mentally owning common and not preferred took some time.
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