SAFE or convertible note or priced round: which instrument should I raise on?
For a fast, cheap seed, use a SAFE (post-money, with a cap) if your investors accept it: no interest, no maturity, minimal legal cost. In India the clean SAFE is legally awkward, so most local angel rounds use a CCPS priced round or an iSAFE/convertible variant, budget for real legal work. Avoid classic convertible notes with a maturity date, a note that comes due before your next round becomes a debt problem you do not want.
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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.
This is the worked dilution example, actual numbers, not a hand-wave: a $100k SAFE with an $8M cap and a 15% discount converting into a round priced at $0.909 per share, showing the discount price ($0.77265) versus the cap price ($0.72727), why the cap wins, and the exact 137,500 shares issued. Change the inputs to your own cap and you can compute your dilution before you sign.
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.
