Stage 1 (pre-seed and seed)
Choose SAFE, note, or priced round by raise size
A founder at S1 raising early capital must decide which instrument to use because legal cost, investor protection, and dilution differ sharply.
Options
SAFEs for raises under roughly five million
Convertible notes for bridge stages needing protection
Priced round once a lead demands it
What mattered
- Priced round legal cost runs near one hundred fifty thousand
- Stacked SAFEs at rising caps compound dilution invisibly
- An unused twenty percent option pool inflates conversion dilution
What was done
Founders in the sessions used SAFEs with caps scaled to raise size, kept the option pool near ten percent, and conceded only observer seats before a priced round.
ClaimScale the SAFE cap to the raise so dilution stays near twenty percent, and avoid stacking SAFEs across caps.
FAQ
- Which stage does this apply to?
- Stage 1 (pre-seed and seed).
- Where does this come from?
- Synthesized from FounderNexus founder sessions, with speakers abstracted.
FounderNexus convenes stage-matched founder groups around decisions like this one.