Most Favored Nation

Also called MFN

A most favored nation clause lets an investor automatically get the best terms you later give to anyone else in the same round. Common on early SAFEs.

Why it matters

MFN protects an early investor from being undercut by a better deal down the line, but a stack of MFNs can quietly ratchet your whole round to its most generous terms. Track them carefully.

For example

An early angel with an MFN clause automatically gets the lower cap a later investor negotiated in the same round, without having to ask.

Go deeper

Most Favored Nation (MFN) Clauses in SAFEs: Why They Matter More Than Founders Think Value Add VC · article This is the one piece that does both jobs you need. It runs the exact worked backward-repricing case (three angels on no-cap MFN SAFEs, later a pre-seed at an $8M cap, and their combined stake jumps from 4.2% to 6.25%), then hands you a four-step audit: identify every instrument with MFN language before you raise again, model conversion assuming all MFN holders elect the lowest cap you plan to issue, disclose MFNs during term-sheet talks, and standardize future SAFEs at the same cap on the same day. That last rule is the practical fix most founders miss. Open valueaddvc.com →

Related terms

Also in Starting Up

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