SAFE Discount
Also called Discount Rate
A percentage price break a SAFE or note holder gets when their investment converts into shares at the next priced round, rewarding them for investing earlier. A 20 percent discount is common.
Why it matters
The discount, alongside the valuation cap, decides how many shares early money converts into. Knowing which one applies (usually whichever is better for the investor) is key to reading a SAFE.
For example
An angel's SAFE has a 20 percent discount, so when the seed prices at 100 rupees a share, their money converts at 80.
Go deeper
Related terms
Also in Starting Up
See how founders actually handle this on Raising your first round, part of the Starting Up hub.
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