How do you raise money when your company is too early to have a price tag? In this video, I’ll explain my experience as CFO with convertible instruments to secure funding without the headache of an immediate valuation. Whether you are a founder in the US, UK, or Europe, understanding the difference between SAFEs, Convertible Notes, and ASAs is critical.
In this video, I’ll cover:
• Early stage valuation problem: Why early-stage founders should delay the valuation discussion until a “priced round” (like a Series A) when there is more data to negotiate a fair price.
• SAFE (Simple Agreement for Future Equity): Created by Y Combinator, this is a founder-friendly, non-debt contract with no interest rates and no maturity dates.
• Convertible Notes: A traditional short-term debt instrument that carries 2% to 8% interest and a maturity date (usually 18–24 months), which can lead to repayment demands if a future round isn’t reached.
• Investor Sweeteners: How Valuation Caps and Discount Rates (typically 15% to 25%) reward early investors for taking on high risk.
• Global Fundraising Standards: Why the SAFE is popular in the US, why European investors often prefer Convertible Notes, and how UK founders use the Advance Subscription Agreement (ASA) instead of a SAFE to remain SEIS/EIS tax-compliant.
• Expert CFO Advice: The danger of “stacking” SAFEs and convertibles and why you must model your dilution to ensure you aren’t giving away more of your company than intended.
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