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SAFE notes · checked 11 November 2026

A SAFE is money now for shares at your next priced round, at the cap or a discount; an Indian company uses an iSAFE (CCPS) or a convertible note instead.

On YC's post-money SAFE the investor owns the amount divided by the cap: $1 million on a $6.7 million cap is about 15%. With both a cap and a discount, the investor converts at whichever gives the lower price, which is why the cap matters more. A US-form SAFE is not recognised for an Indian private limited company, and a DPIIT startup's convertible note needs at least Rs 25 lakh per investor in one tranche.

Every question on it 12 answers

  1. What is a SAFE and how does it actually work? Starting Up
  2. What's the difference between a valuation cap and a discount on a SAFE? Starting Up
  3. What should I check before signing a SAFE, iSAFE, or convertible note? How Founders Use AI
  4. SAFE or priced round: which instrument should I use for my first raise, and does it work in India? Starting Up
  5. SAFE or convertible note or priced round: which instrument should I raise on? Starting Up
  6. How do SAFEs and term sheets differ in India versus the US? Starting Up
  7. A SAFE has no valuation cap and no discount. Should I ever sign it? Starting Up
  8. How do stacked SAFEs at different caps convert into a mess at my priced round? Starting Up
  9. Post-money SAFE or pre-money SAFE: which one am I actually signing and why does it matter? Starting Up
  10. Can I even use a SAFE in India, or do I have to do a CCPS or convertible note? Starting Up
  11. Should I raise on a SAFE or just do a priced round at seed? Starting Up
  12. What is an MFN clause in a SAFE and how can it come back to bite me? Starting Up

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The terms

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