Understand what converts, and when
A SAFE is a promise of future shares, not a loan and not stock today. Whether it is post-money or pre-money, what the cap and discount are, and what counts as a triggering round decide how much of the company the investor ends up with.
Look beyond the template
Side letters can add pro rata rights, information rights and board observer seats. Several SAFEs with different caps convert differently and can produce a cap table nobody expected. Model all of the instruments together, against the round you expect next, before you sign the next one.
Check approvals and filings
Board and stockholder approvals, the securities exemption you rely on, Form D and state notices, and the representations you make to investors. None of it is complicated when done at the time; all of it is painful to reconstruct during diligence.
References
How Lumen Law & Co. can help
The headline SAFE terms can be simple; their interaction with the cap table and future rounds often is not.
- Review valuation caps, discounts, MFN and pro rata terms, and side letters.
- Analyze the possible effect of multiple instruments on the future cap table.
- Assist with transaction documents, approvals, and negotiations within the agreed scope.