Fundraising & Investors

SAFE or priced round: which instrument should I use for my first raise, and does it work in India?

A starting point

Use a SAFE or convertible note if you want to close fast and defer the valuation fight, and a priced round when investors want defined ownership and a board seat. The catch in India: US-style SAFEs do not map cleanly onto Indian company law, so a domestic entity typically uses a CCPS or convertible note structure instead. Decide the instrument with a lawyer who has papered Indian rounds, not by copying a Silicon Valley template.

Go deeper

Hand-picked from around the web, each with a note on why it earns your time.

3 resources 3 link-checked

Read

📄 Article
✓ Link checked Free Beginner

Why we picked it This is the source document for the entire SAFE debate, written by YC's CFO who papered thousands of these. It walks the actual dilution math (why post-money SAFEs are cleaner than pre-money), what a priced round buys you that a SAFE does not (defined ownership, a board), and the trap of stacking SAFEs at low caps that you only reconcile at the Series A. Read this before you copy any template.

Understanding SAFEs and Priced Equity Rounds

From Y Combinator by Kirsty Nathoo 15 min read

  • A SAFE is not debt: no interest, no maturity date, no repayment, which is why it closes in days while a priced round takes weeks of lawyering
  • Post-money SAFEs make your dilution knowable at signing; that clarity is the whole reason YC moved off the pre-money version
  • Price the round when investors want defined ownership and a board seat, or once stacked SAFE caps make the conversion math unpredictable
Open ycombinator.com →
📄 Article
✓ Link checked India Free Intermediate

Why we picked it A practising senior partner spells out exactly why a raw US SAFE is dangerous for an Indian entity: it can be treated as a 'deposit' and trigger a FEMA or Companies Act violation, a landmine that only detonates when you reach Series A. It then names the compliant substitutes (iSAFE via CCPS or CCD, and the DPIIT convertible note) so you know what to actually ask your lawyer to paper.

Convertible Notes and SAFE Notes in India: The Dilemma

From Bar & Bench by Madhavan Srivatsan 10 min read

  • A US-form SAFE is not recognised in Indian law and can be recharacterised as a 'deposit', exposing the company under FEMA and the Companies Act
  • The compliant SAFE substitute is an iSAFE structured as CCPS/CCD that compulsorily converts on a qualifying round, avoiding any redemption feature
  • The convertible note route is open only to DPIIT-recognised startups, with a 25 lakh minimum per investor and a 10-year conversion or repayment clock
Open barandbench.com →
📄 Article
✓ Link checked India Free Intermediate

Why we picked it Once you accept you are using CCPS, this is the operator's manual for what that instrument actually carries: 1x non-participating liquidation preference, weighted-average anti-dilution, reserved matters, and the FEMA constraint that bites hardest. For a foreign investor, CCPS cannot be truly unpriced, it must be issued at or above registered-valuer FMV, with an FC-GPR filing inside 30 days. That is the single biggest way an Indian round differs from a Valley SAFE.

CCPS SAFE Notes in India: Structure, Investor Rights, and Compliance

From Treelife by Treelife 18 min read

  • CCPS is India's SAFE substitute: money in now, preference shares that auto-convert to equity on a priced round or liquidity event
  • Foreign investors cannot get a truly 'unpriced' instrument; CCPS must be priced at or above registered-valuer FMV under FEMA, with FC-GPR filed within 30 days
  • The light 100X iSAFE template and a VC's CCPS use the same instrument but load very different investor rights (liquidation preference, anti-dilution, board seats)
Open treelife.in →

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