SAFE or convertible note or priced round: which instrument should I raise on?
The short answer
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.
Go deeper, your way
3 hand-picked resources, 3 link-checked. Pick how you want to dig in.
▶️ Video
✓ Link checkedFreeBeginner
Why we picked it
YC's own CFO walks through exactly how a SAFE, a note, and a priced round each land on your cap table, and she does the cap and discount math live on slides so you can see founder ownership move. This is the canonical source: YC invented the SAFE, so this is the instrument explained by the people who wrote it, not a law firm reselling the idea.
A SAFE is not debt: no interest, no maturity, so it never comes due as a repayment problem before your next round
A valuation cap and a discount are two different levers, and the investor converts on whichever gives them the lower price (more shares, more dilution for you)
Model the shadow cap table: SAFEs do not show up as issued shares until they convert, so your real post-Series-A ownership is lower than the number you carry in your head
Why we picked it
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.
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.
